Key Takeaways
- Five IRS focus areas: preparer qualifications, methodology, inspection, classification accuracy, and reasonableness.
- Form 4562 management requires multi-class tracking, correct conventions, and partial disposition elections.
- Engineering-based studies typically retain 90-100% of their benefit through audit.
- Audit defense costs ($5,000-$15,000) are a justified investment relative to the benefit protected ($50,000-$200,000+).
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Test Your Knowledge
1.Which of the following is NOT one of the IRS's five focus areas when auditing a cost segregation study?
2.After a 1031 exchange, which portion of the replacement property basis qualifies for a new cost segregation study?
3.An IRS examiner proposes reclassifying all 5-year and 7-year components from a cost segregation study back to 27.5-year property. What is the recommended first response?