What is the origin of Cost Segregation Studies?
Cost segregation is not new; on the contrary, it has been in existence since 1954 when the IRS allowed for certain personal assets to be accelerated into a shorter life class. However, it wasnt until Hospital Corporation of America sued the IRS in 1997, and won, that the IRS revisited the issue of accelerated depreciation. Subsequently, after the Tax Act of 2004, the IRS chief counsel issued a memo stating that cost segregation, for it to be properly applied, had to involve those with competencies in architecture, engineering or construction and/or construction techniques, in order for personal property assets to be accurately identified and segregated. Cost Segregation, as we know it today, was thus born.
