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Understanding Cost Segregation

Many small to medium sized business owners have only recently been introduced to the concept of cost segregation and how it can help their businesses. If you are new to cost segregation and are interested in finding out more about this strategic tax planning tool, read on for in depth advice from industry expert James Doughtery, of ELB Consulting Inc:

Cost Segregation is a commonly used strategic tax planning tool that allows individuals and companies, who have purchased, constructed, remodeled or, expanded any kind of real estate to increase cash flow by accelerating depreciation deductions and deferring federal and state income taxes.

The benefits of a cost segregation study include:

  • An immediate increase in cash flow
  • A reduction in current tax liability
  • The deferral of taxes
  • The ability to reclaim “missed” depreciation deductions from prior years (without having to amend tax returns)

At ELB, we take pride in over 20 years of industry experience, and maximizing the tax deduction and deprecation opportunities for our clients. “The right experience truly makes a difference.”

ELB has completed over 10,500 studies ranging in size from small office remodels to billion dollar high-tech manufacturing plants. Our skilled staff of cost segregation specialists uses the highest level of engineering methodology as defined by the I.R.S. to produce thorough, accurate, and dependable “fully engineered and accounted” cost segregation studies.


When comparing to the I.R.S. Audit Techniques Guide Methodologies, our report format and methodology exceeds the requirements of the Detailed Engineering Approach from Actual Cost Records or Detailed Engineering Cost Estimate Approach. Our team of experts has created the most detailed engineering methodology available to the market. The ELB Cost Segregation Study will account for ALL qualifying (5, 7 and 15 year items) and non-qualifying (39 year or 27.5 year items). This not only allows us to maximize depreciation by addressing components our competitors never considers, it provides our clients with a fixed asset tool.

Other firms produce an “engineered based” study format (Survey or Letter, or Residual as defined by the I.R.S.) which can result in thousands and/or millions of dollars still left on the table.

Our unique study format is “fully engineered and accounted” and provides the highest level study detail and tax benefits available to the client. This study format was developed for the following primary reasons:

ü Provide the most available tax benefits available to each client

ü Provide the most accurate and dependable engineered cost segregation study

ü Provide a study format that includes asset management and disposition features

ü Provide an unmatched study guarantee

CPA’s and the I.R.S. not only support our studies, but often ask our experts to review competitors’ report for accuracy. In fact, one of our partners is an Expert Witness for the U.S. Tax Court in cost segregation. He is considered by many as the Pioneer of the Industry.

We are confident in our work product. We personally guarantee each and every study. Should you ever encounter an audit, we stand behind and defend our study at no additional cost to you (Full Audit Protection Guarantee). Our in-house team of engineers, accountants and construction professionals has performed thousands of cost segregation studies, and we have NEVER had a study rejected by the I.R.S.

At ELB, we never settle for less, nor should you.

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