The Baker Tilly Cost Segregation Group completes hundreds of studies every year and will perform the study based on the premise that if the analysis does get audited, it is defendable under IRS scrutiny.
Even though the audit probability of cost segregation studies traditionally has been low, we assume that every analysis may eventually get audited by the IRS. In general, having a professional engineering based cost segregation study done will provide the taxpayer with the highest level of documentation and analysis to help defend the positions taken in the event of an IRS audit.
A taxpayer attempting to do cost segregation internally or having a general contractor help to perform the analysis is generally much more risky and harder to defend in the event of an IRS audit. The general contractor may know the costs of a project very well, but it is highly unlikely that a contractor knows the IRS regulations and guidelines related to cost segregation tax law.
In addition, most general practicing CPAs do not have the technical training, experience, education, or background to complete the engineering analysis component of the study.
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