IRS Position on Cost Segregation & Depreciation Rules Guide

This page explains the Internal Revenue Service’s official stance on cost segregation and how it fits into federal depreciation rules. It highlights the IRS Audit Techniques Guide (ATG) as the primary reference for examiners and taxpayers, showing that allocating individual asset components into appropriate recovery periods is the correct method for computing depreciation. The IRS views cost segregation as more precise than traditional straight-line depreciation because it separates assets into classes with shorter lives, enabling more rapid depreciation deductions. The content also touches on the impact of the 2017 Tax Cuts and Jobs Act, which expanded bonus depreciation for qualified property. Through clear explanation of IRS expectations and terminology, the page offers foundational insight into how cost segregation aligns with accepted tax practice and compliance standards