LOOKBACK COST SEGREGATION

Clients are often surprised to find out that Cost Segregation is NOT JUST for the Tax Year a Building is Purchased or Constructed.  Cost Segregation can be applied to capitalized costs in any tax year.  This is called the Lookback and it's exactly like Cost Segregation in every way but one:  The 481(a) Adjustment.

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What is the 481(a) Adjustment?

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The 481(a) Adjustment is an adjustment to Accumulated Depreciation in the current Tax Year and it is claimed on Form 3115.  Since the goal of a Cost Segregation Study is to move eligible costs out of Long Life Property and into Short Life Property (creating a Tax Advantage), the 481(a) Adjustment is a Benefit.  The Client is effectively "catching-up" on missed Accelerated Depreciation.  And because Form 3115 is filed in the Current Tax Year, All Past Tax Years Remain Closed!

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