Cost Segregation Study Question

[Abad Marroquin]

Hi BP community. I bought 28 apartment units in Georgia in June 2022. I am looking to hire a firm to do a cost segregation study. In one of the quotes, the agents gives me the option wether to authorize the his firm to classify some items under the 5 year instead of 27 yeast, but the IRS has already held in a 2012 case that those items such as cabinets, sinks, etc, are not 5 years, but 27. The agents believes the taxpayer in the 2012 case did not represent themselves appropriately to defend their case. Please let me know what you guys think. I don’t want to be in a situation that I need to be audited by the irs. I am including his exact words here for you to read it.

“For residential properties, please be advised that the IRS may dispute that certain items inside the rental units are not 5-year property. These items include, but are not limited to, certain kitchen cabinetry, kitchen sinks and piping, and appliance related electrical and plumbing systems. On March 12, 2012, the tax court memo involving AmeriSouth XXXII, LTD v. Commissioner held that these components are “structural” and have a 27.5-year tax life. However, it is important to note the taxpayer did not appropriately defend themselves in this case and let the IRS present their positions on these issues without being challenged. Please let us know right away if you do not want us to classify these items to a 5-year tax life”