Key Takeaways
- IRS examiners focus on preparer qualifications, methodology, physical inspection, classification accuracy, and reasonableness.
- Engage a tax attorney (not just a CPA) for audits involving $50,000+ in cost segregation tax impact.
- The engineering firm should be willing to participate in audit defense—verify this in the engagement letter.
- IRS Office of Appeals often provides more favorable outcomes than the initial examiner—do not concede prematurely.
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Test Your Knowledge
1.What areas do IRS examiners typically focus on when auditing cost segregation claims?
2.What is the best defense preparation strategy for a potential cost segregation audit?
3.If an IRS examiner challenges specific component classifications, what is the taxpayer's best response?