ASCSP - About the Exam

American Society of Cost Segregation Professionals

About the Exam

Subject Matter

Applicants should be familiar with all relevant issues regarding cost segregation including, but not limited to:

Reference Documents and Forms:

IRS ATG
AIA Forms G702 and G703
RS Means Cost Guides
CCH 2007 US mater Depreciation Guide
IRS Form 3115 and instructions
IRS Publication 946 - How to Depreciate Property

Architectural Graphic Standards (published by the AIA)

Relevant Revenue Procedures Regs and Tables:

Rev Proc 87-56
Rev Proc 2002-9
Rev Proc 2002-19
Rev Proc 2007-16
Circular 230

Internal Revenue Code:

Section 38 - General Business Credit
Section 48 - Energy Credit and old ITC
Section 110 - Qualified Lessee Construction Allowances for Short Term Leases
Section 167 - Depreciation (pre-1981)
Section 168 - Depreciation (ACRS & MACRS)
Section 280B - Demolition of Structures
Secion 1245 - Gain from Dispositions of Certain Depreciable Property
Section 1250 - Gain from Dispositions of Certain Depreciable Realty
Section 6701 - Penalties for Aiding and Abetting Understatement of Tax Liability
Section 6702 - Frivolous Tax Submissions
Section 263A - Uniform Capitalization
Section 263(a) & Proposed Reg 168745-03 IRB 2006-39 (Sept. 25, 2006)

Private Letter Rulings:

PLR 7950004
PLR 8002002
PLR 8002015
PLR 6409175770A/1
PLR 6409175770A/2
PLR 6612301720A

Notable Cases:

Central Citrus Co. v. Commissioner, 58 T.C. 365 (1972).
Hospital Corporation of America, Inc. v. Commissioner, 109 T.C. 21 (1997), acq. in part and nonacq. in part, 1999-2 C.B. xvi.
Scott Paper Co. v. Commissioner, 74 T.C. 137 (1980).
Morrison, Inc. v. Commissioner, T.C. Memo. 1986-129, aff’d, 891 F.2d 857 (11th Cir. 1990).
Whiteco Industries, Inc. v. Commissioner, 65 T.C. 664 (1975), acq., 1980-2 C.B. 2.
Metro Nat'l Corp. v. Commissioner, T.C. Memo. 1987-38
Boddie-Noelle Enters. v. United States, 96-2 USTC ¶ 50,627 (Fed. Cl. 1996), aff'd without published opinion, 132 F. 3d 54 (Fed. Cir. 1997)
Joseph Weirick, 62 TC 446 (1974)
A.C. Monk & Co. v. United States, No. 78-126-CIV-4, 1981 U.S. Dist. LEXIS 17764 (E.D.N.C. Mar. 30, 1981), aff'd in part, rev'd in part, vacated and rem'd, 686 F.2d 1058 (4th Cir. 1982), on remand, 577 F. Supp. 4 (E.D.N.C. 1983).
Ernst & Whinney vs. U.S. 83-1 USTC (DC-GA)
Texas Instruments Inc. v. Commissioner, T.C. Memo. 1992-306

Others:

FIN 48
Sarbanes-Oxley Act
ASCSP Ethics and Standards
ASCSP By-laws
Senate Finance Committee Report 92-437 1972-1 C.B. 559-588
Senate Finance Committee Report 95-1263 1978-3 C.B. 315, 410-423

Sample Questions

The following questions are representative of the 120 multiple choice questions that will be included in Part I of the exam:

A computer system used to control the heating, ventilation, and air conditioning system of an office building is classified as

      (A). A structural component of a building with a 39 year recovery period
      (B). Information Systems with a 5 year recovery period since it is computer equipment
      (C). Office Furniture, Fixtures, and Equipment
      (D). Section 179 property
      (E). None of the above

A project has an electrical panel with 42 circuit breakers, each rated at 20A/1P. Through your detailed analysis you have identified 28 circuit breakers directly associated with assets deemed to be personal property in nature. What percentage of the panelboard, if any, would you classify as personal property?

      (A). The entire panelboard since over 50 percent of the usage of the panel is for personal
            property assets
      (B). None of the panelboard since the panelboards are always structural components of a
            building
      (C). 66.7 percent of the panelboard
      (D). 33.3 percent of the panelboard

Bulletin F, otherwise known as IRS Publication Number 173, was issued for what purpose?

      (A). To identify Section 38 property for the Investment Tax Credit
      (B). To provide a useful life guide for various types of property
      (C). To provide standards for cost segregation studies
      (D). To provide standards for tenant finishes and tenant standard allowances in commercial
            office buildings
      (E). To clarify the allocation of indirect costs in General Contractor payment requests

The project you are working on is a manufacturing facility with an extensive overhead crane system which is supported by the columns and beams which also support the structure. How would you estimate the value of the structural steel directly attributable to the crane system?

      (A). Take 50% of the structural steel costs since it provides a dual use
      (B). Not take any of the steel costs, since structural steel is always a structural component
            of a building
      (C). Take the weight of the crane as a ratio of the total weight of the steel as the proper
            percentage
      (D). Do a complete structural analysis of all the structural steel members and use the loads
            imposed by the crane and its capacity as compared to the building live/dead loads to
            determine the ratio of KIPS imposed on each structural steel member
      (E). Use an engineering estimating or valuation manual to determine an overall cost per square
            foot for the steel used by the crane

A one-line diagram can best be described as

      (A). A graphic representation of the entire plumbing system
      (B). A diagram of the primary electrical components
      (C). A plot plan included in a report showing basic building layouts
      (D). A rendering of the building
      (E). None of the above

Site improvements are generally considered to be 15-year recovery period property.   What is the MACRS class for site improvements?

      (A). 00.11
      (B). 00.3
      (C). 57.0
      (D). 00.13
      (E). 26.1

In Whiteco Industries, Inc. v. Commissioner, 65 T.C. 664, 672-673 (1975), the Tax Court established how many questions to ascertain whether a particular asset qualifies as tangible personal property?

      (A). 5 questions
      (B). 6 questions
      (C). 7 questions
      (D). 4 questions
      (E). It did not develop any questions, since the issue in the case was the classification of
            elevators in a commercial office building

The following questions are representative of the essay portion of the exam. Seven out of ten questions must be answered.

QUESTION 1
You have been assigned to perform a cost segregation study on a used property. Describe in detail the work steps you would perform, the information you would request from the client, and any mitigating circumstances which could affect the results.

QUESTION 2
The client (an owner of multiple office buildings) for which you performing a cost segregation study has indicated that, they believe the roof top HVAC units are 7 Year property rather than 39 Year property. The rationale is that the HAVC units are “equipment” and as such are not structural elements of a building. In addition, the client states that the Service has always allowed this classification in previous audits. The client asks you to classify the HVAC units as 7 Year property in the final cost segregation report. Present your rationale either for or against this classification, and how you would present your findings in your final report.