cost segregation sales person

Why You Need to Ask Your Cost Segregation Salesperson These Questions

Cost segregation is not only engineering-based but also TAX based. Therefore, your salesperson must have advanced knowledge of the tax implications of a cost segregation study.

Cost segregation is not only engineering-based but also TAX based. Therefore, your salesperson must have advanced knowledge of the tax implications of a cost segregation study.

Formerly, I was an Executive Vice President at a prominent cost segregation firm for seven years. Moreover, I have been an owner of a Tax Method Change firm for the past two years. With this experience, I can say that the wrong cost segregation salesperson can cost you a great deal of money.

During my career, I have seen numerous cost segregation salespeople. Some worked only to collect agency representatives, while others had many unrelated jobs to balance. All had a range of backgrounds, from homemakers to convicted felons and retirees to high school dropouts. From the outside looking in, it would appear that no particular skillset or knowledge base is needed to be a representative for a cost segregation company.

But how will these individuals be your advocate and assist your CPA with in-depth issues that affect your taxes? In two words: they won’t.

Here is a list of questions to ask your salesperson:

  • Do you understand the Tangible Property Regulations? If yes, what classes have you taken on the TPRs?
  • Does your firm “scrub” schedules to eliminate expenditures that never should have been capitalized under §263a?
  • Can you help me in the future with capitalization/expense decisions?
  • Do you understand the three Safe Harbors under §263a?
  • Do you know the impact of the Real Estate Professional status? If yes, ask them to explain the 750 hours/50% personal service time criteria.
  • If you are renovating your building, ask them about their understanding of Partial Asset Dispositions.
  • Ask them about 280B and GAAs if you are demolishing your building.
  • How can recapture be minimized?
  • Does your firm provide IRS Form 3115s?
  • Does your firm sign the 3115s?

This list is just the tip of the iceberg. However, it is imperative to understand that if your salesperson answers no to more than two of these questions, you will not be working with someone who can truly assist you. You deserve not just a representative but an expert you can trust who will leave no stone unturned regarding your taxes.

Kevin Jerry is a nationally recognized expert in Tax Method Changes. He specializes in Cost Segregation, Tangible Property Regulations, and revenue recognition changes. Kevin graduated cum laude from the University of Cincinnati with a Master of Science Degree in Real Estate Taxation. Over the last seven years, he has worked with Eric Wallace on the Tangible Property Regulations with some of the largest property owners in the country.