Fixed Asset Management
A coordinated set of fixed asset studies focused on accurate classification, accelerated depreciation, and compliance-driven cost recovery.
Cost Segregation
What is a cost segregation study?
A cost segregation study is a cost recovery analysis that accelerates depreciation by identifying and reclassifying qualifying components of a building from long-life real property to shorter recovery periods under the Internal Revenue Code.
Rather than depreciating an entire property over 27.5 years (residential) or 39 years (commercial), the study analyzes the property at the component level to identify assets—such as certain interior improvements, building systems, and site improvements—that may be depreciated over 5, 7, or 15 years. This reclassification accelerates deductions that would otherwise be recovered over longer depreciation lives.
How the study works
BAY performs a detailed, engineering-based review of the property to:
Identify and classify building components by applicable recovery period
Allocate costs to qualifying short-life assets and site improvements
Align depreciation treatment with current tax law and guidance
Under current law, 100% bonus depreciation is available for qualifying assets, allowing these reclassified components to be fully expensed in the year placed in service, rather than depreciated over their standard recovery periods.
Based on asset composition, cost segregation studies commonly result in first-year deductions of approximately 20–30% of a property’s purchase price, though results vary by property.
Key benefits
Accelerated depreciation deductions through reclassification of qualifying assets
Earlier recovery of capitalized costs, improving near-term cash flow
IRS-compliant documentation supporting asset classification and depreciation
Seamless coordination with disposition and capital expenditures studies
Disposition of Assets (Partial Disposition) Studies
What is a Disposition of Assets Study?
A Disposition of Assets Study—often referred to as a partial disposition analysis—allows property owners to recognize a loss on the remaining tax basis of building components that are retired, replaced, or demolished.
When assets are removed as part of a renovation, improvement, or demolition, tax rules permit taxpayers to write off the undepreciated basis of those components in the year of disposition, rather than continuing to depreciate them over their original recovery periods. Without a formal study, these losses are frequently overlooked and remain embedded in the building’s depreciation schedule.
How the study works
BAY performs a detailed, asset-level analysis to:
Identify disposed building components and equipment
Quantify the original cost and remaining tax basis of those assets
Substantiate the disposition in accordance with IRS regulations and applicable accounting methods
This process ensures that eligible losses are properly recognized, documented, and defensible, while maintaining alignment with ongoing depreciation schedules.
Disposition studies are commonly performed in connection with:
Building renovations or tenant improvements
Replacement of major systems (HVAC, electrical, plumbing)
Partial or full demolitions
Equipment removals or retirements
Key benefits
Immediate recognition of remaining basis on disposed assets
IRS-compliant documentation supporting partial dispositions
Improved cash flow through accelerated deductions
Seamless coordination with cost segregation studies to avoid duplicated or missed assets
Capital Expenditures
What is a Capital Expenditures Study?
A Capital Expenditures Study provides a detailed analysis of costs incurred for property improvements, renovations, and construction projects to ensure they are properly classified, capitalized, and depreciated in accordance with the Internal Revenue Code.
By reviewing capital investments at the invoice and component level, the study ensures that expenditures are accurately allocated between capital improvements and currently deductible repairs, and that capitalized costs are assigned to the appropriate asset classes and recovery periods.
How the study works
BAY performs a comprehensive review of project documentation, including:
Construction invoices and vendor records
General ledgers and fixed asset schedules
Architectural and engineering documentation
This analysis distinguishes capital improvements from routine maintenance, identifies assets eligible for shorter depreciation lives, and ensures depreciation treatment is consistent with IRS capitalization, repair, and improvement regulations.
Capital Expenditures Studies are commonly performed in connection with:
Commercial and industrial property upgrades
Multifamily renovations and repositionings
New construction and build-outs
Portfolio-wide capital improvement programs
Key benefits
Accurate classification of capital improvements versus repairs
Optimized depreciation schedules for eligible assets
Strong compliance support through detailed documentation
Improved long-term asset planning and fixed asset management
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