Quote from @Natalie Kolodij:
This is a long revived post-
I'll add a little tax pro insight from what's happened in the last 2 years
The IRS went from < 100 engineers on staff who were qualified to audit cost segregations to a few hundred.
I have been able to review or been told of several audits (from other REI tax colleagues) related to cost segs in the last year or so- and of those none of DIY cost segs were allowed under audit.
Natalie - would you be able to provide color as to why the audits of DIY cost segregation studies were not allowed under IRS audit? Was the reason due to input errors or general methodology used? I have been doing a lot of research on cost segregation studies including the DIY option and any additional color would be helpful.
One question I have is that I have heard that DIY cost segregations tend to be more conservative, meaning a full engineered study would likely return more in deductions. Given when a return is audited some of these DIY firms note that (if audit protection is purchased) they will do a full engineered study to support the figures used within the audit. Assuming no input errors by the client, I would assume that these studies would return more in deductions than the DIY. In this case, would the IRS reject a prior return's use of a DIY if a full engineered study supports or exceeds the deductions that it reported?
Thanks
