Feasibility
Property profile, cost basis, and placed-in-service history. A written estimate of benefit before you commit, including "not worth it," when that's the answer.
A commercial building defaults to 39-year depreciation (27.5 for residential rental), but many of its components exist to serve your business process, not the building itself. An engineering-based study identifies those components and moves them to 5, 7, and 15-year lives. The tax courts call the dividing line function. So do we.
Federal case law, most notably Hospital Corporation of America v. Commissioner, established that a building component can qualify as tangible personal property when it serves the business function conducted inside the building rather than the operation of the building itself. The same electrical run is 39-year property when it powers general building service, and 5-year property when it exists to feed specific business equipment.
That is why cost segregation is an engineering exercise, not an accounting shortcut. The IRS's own Cost Segregation Audit Techniques Guide sets the standard: a component-by-component engineering analysis with documented support for every allocation. That is the only kind of study we deliver.
When a workspace is deliberately engineered around its work process, the functional purpose of its systems is documented by design. An EATMS human factors engineering study produces a contemporaneous record of exactly which building systems serve the work: task lighting specified for inspection stations, dedicated circuits feeding adjustable workstations, acoustic treatments engineered for cognitive-load control, data cabling serving process equipment. That record is precisely the functional-use evidence an engineering-based cost segregation study is built on. The design file and the depreciation file become the same file.
| Component | Serving the building | Serving the work process |
|---|---|---|
| Electrical distribution | General service & outlets 39-yr | Dedicated circuits to workstations & equipment 5/7-yr |
| Lighting | General illumination 39-yr | Task & inspection lighting specified to the process 5/7-yr |
| Data & low-voltage cabling | Building systems wiring 39-yr | Cabling serving process equipment & operator stations 5-yr |
| HVAC | Occupant comfort 39-yr | Zone conditioning required by equipment or process allocable |
| Partitions & finishes | Structural walls 39-yr | Modular partitions and process-driven millwork 5/7-yr |
| Site improvements | — | Parking, walkways, landscaping 15-yr |
Illustrative categories only. Actual classification always follows the engineering analysis of your facility and current IRS guidance.
Property profile, cost basis, and placed-in-service history. A written estimate of benefit before you commit, including "not worth it," when that's the answer.
Site documentation, drawings and cost records reviewed component-by-component; functional use documented for each allocation.
Full report to IRS Audit Techniques Guide standards, with asset-by-asset class lives and the depreciation schedules your preparer needs.
New construction goes on the return directly; existing buildings catch up missed depreciation via a §481(a) adjustment on Form 3115, with no amended returns required.
Under the 2025 tax act, 100% bonus depreciation was made permanent for qualifying property acquired after January 19, 2025. Every dollar a study moves into a 5, 7, or 15-year class is generally eligible for immediate expensing, which is what makes a lookback study on an existing building, paired with the §481(a) catch-up, one of the most powerful timing tools available to building owners. Eligibility depends on acquisition dates and your facts; we confirm current guidance on every engagement.
Send the property basics (cost, type, placed-in-service date) and we'll tell you in writing whether a study is worth commissioning.
Request a Feasibility Review