Cost segregation can offer huge tax benefits to real estate owners willing to commission what may be a complex and expensive study. Instead of viewing real estate as being comprised of just land and buildings, cost segregation generally aims to segment a real estate owner's cost basis into hundreds of separate items, some of which constitute tangible personal property and land improvements. This method of cost allocation generally enables a real estate owner to increase the rate at which it depreciates its property, taking advantage of the fact that personal property and land improvements can be depreciated significantly faster than the 39-year straight-line depreciation for a commercial building. It is no surprise that the popularity of cost segregation has surged over recent years.
In 2012, the Tax Court in Peco Foods, Inc. v. Commissioner1 took some by surprise in disregarding the real estate purchaser's post-closing cost segregation study. The U.S. Court of Appeals for the Eleventh Circuit recently upheld the Tax Court's decision. What does this case mean for cost segregation?
Background
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
