Atlas Valuation Solutions LLC Cost Segregation Services Construction Cost Analysis Owners of construction projects are constantly confronted with the challenges of recognizing tax benefits arising from the proper identification of property eligible for shorter depreciable lives and tax credits in new construction projects or major construction rehabilitations. How Atlas Can Help To address these significant issues, we can segregate construction costs to help taxpayers maximize tax benefits and minimize controversies with the Internal Revenue Service. Atlas valuation professionals have extensive experience in integrating construction tax planning into the appraisal analysis. Our consultants include architects and engineers who specialize in these studies and who are thoroughly familiar with the relevant Internal Revenue Code provisions and IRS rules and regulations. The methodology used in our reports is effective in supporting and documenting your case if you undergo IRS scrutiny. Our typical construction cost analysis consists of: A physical inspection of the property to be analyzed; A compilation of all project cost data, including contractor payment requests, change orders and direct purchases by the owner; A review and coding of project drawings and specifications; An estimation of in-place costs, with the assistance of the project’s general contractor, using computerized quantity survey estimating techniques on a “category” basis for cost allocation purposes; Reconciliation of the estimated in-place costs to the actual trade costs furnished and allocation (pro rata) of any fees and indirect costs identified to the reconciled or actual cost of each category; Classification of categories as either real or personal property. What You Can Expect After we have completed our study, we issue a report that includes a narrative section – a description of the property analyzed, tax considerations and the procedures used in the analysis – and the following schedules: Schedule of Contractor Costs – Summary of construction costs as reported by the general contractor, identified by individual subcontract and respective cost; Summary of Categories – Identifies the functional categories of construction and their respective total costs, classified into proper asset classes. Our report also provides you with a complete audit trail by accounting for all capitalized costs. This requires verifying: General construction costs as reported by the general contractor; Direct purchases by the property owner; All drawings and specifications used in construction; The categories and their respective costs. The relationship of the final report to the construction documents used in the analysis is also important to an effective audit trail. Our schedules are set up to allow direct identification of any category on the drawings and vice versa. This makes it possible to identify items included in any category and the amount and specific use of each item. Supporting a property classification when audited by the IRS is an important concern in our approach and documentation process. As a result of our analysis you get a full description and definition of personal versus real properties and complete documentation for compiling and reporting construction costs. We can provide construction owners with help in: construction cost segregation, rehabilitation credits, design consultation, change order reviews, useful life studies, depreciation rate analysis, construction cost monitoring, audit support and accelerated cost recovery analysis. Our experience indicates that it is never too early or late to contact our valuation consultants. In fact, we have discovered that the earlier we are involved with new construction, the sooner we can begin to work with your architect and interior designers to help specify elements that qualify for shorter lives. We can also re-examine your cost study on a building already completed to support a new or amended tax return.