Eight steps, one record
Each step leaves a trail in the workpapers: who did it, from which document, under which authority.
- Step 1
Intake in the client portal
You answer plain-language questions about the property (type, use, dates, land, prior depreciation) and upload the documents you have. You sign a representation letter confirming the facts and records are complete.
- Step 2
Cost records extracted
AI reads the closing statement, contract, appraisal and construction pay applications and proposes cost lines. Code then reads each dollar amount from the exact cell the line cites, and lines whose references do not exist are rejected. Staff confirm the ledger.
- Step 3
Basis built and reconciled
Land is valued first, with the method recorded. Indirect costs are allocated by rule. The components must reconcile to what you actually paid; a variance is reported as a finding, never scaled away.
- Step 4
Components classified with authority
AI proposes a class for each component from a closed catalog, citing only authorities on a closed list: the IRS industry matrices, Rev. Proc. 87-56, the §1.48-1 rules and the leading cases. A rule-based classifier votes too; disagreements and low-confidence calls go to staff.
- Step 5
Depreciation computed by code
MACRS schedules, the bonus rate from the contract date, the mid-quarter test, and for a look-back the §481(a) adjustment are all deterministic calculations, tested against the IRS tables.
- Step 6
CPA Agent review
A reviewing AI from a different model family than the one that drafted the study reviews it twice: once against the 13 quality elements of the IRS Audit Techniques Guide, once from an examiner’s point of view. Every finding needs a recorded disposition.
- Step 7
Human CPA approval
A CPA reviews the findings, the classifications and the numbers, then approves and signs. The approval is tied to the exact content approved, so any later change needs a new approval.
- Step 8
Delivery
You receive the final report. Your CPA or tax preparer can request the asset schedule, the depreciation workbook and, for a look-back, the Form 3115 support; when your CPA firm engages us, the firm receives them directly. The workpaper binder holds the trail an examiner would ask for.
What we ask you for
Contemporaneous cost records are the most reliable evidence a study can use. Send what you have; we tell you what is missing and why it matters.
| Document | What it supports | When |
|---|---|---|
| Closing statement and purchase contract | Price, closing costs, and the contract date that sets the bonus rate | Acquisitions |
| Appraisal, or the contract’s price allocation | Land value, and any allocation you are already bound by (§1060) | Acquisitions |
| AIA G702/G703 pay applications, change orders, invoices | The best evidence of what each component cost | New construction, renovations |
| Drawings and specifications, if you have them | Quantities and the location of equipment-serving systems | When available |
| Prior depreciation schedules or fixed-asset ledger | What has been claimed, for reconciliation and any look-back | Always |
| Photos or a guided walkthrough of the property | The inspection record; a study cannot be finalized without one | Always |
What AI does in a study, and what it never does
The AICPA’s tax standards say tools cannot replace professional judgment. We built the workflow so they cannot.
| AI does | AI never does |
|---|---|
| Reads your documents and proposes cost lines | Decide any dollar amount; code reads amounts from the cited cell |
| Proposes a class for each component, from a closed list | Cite an authority that is not on the approved list |
| Drafts narrative around computed figures | Write numbers into the narrative; figures are filled in by code |
| Reviews the assembled study as an independent CPA Agent | Approve the study; a CPA does that, and signs |
The workpaper binder includes a software and AI disclosure: which steps used AI, under which prompt versions, and what a person checked. An examiner’s standard request asks for a description of the software and formulas behind a study, so we answer it before it is asked.
The inspection record
The IRS guide recommends a field inspection for every quality study, and photos are a standard exhibit. Before a Ricerca study can be finalized it needs a documented inspection: a photo walkthrough you complete from a checklist, or an on-site visit. For an acquired building with few drawings, an on-site visit may be the right call; we tell you when.
When a study needs a specialist
Some facts are outside a cost study: an appraised land value, or the valuation of an older building bought used. Where a property calls for an appraiser or an engineer’s takeoff, we say so in the assessment rather than paper over it. Our studies are engineering-informed, not engineer-certified.
The standard we build to
The IRS Cost Segregation Audit Techniques Guide (Pub 5653, February 2025) lists 13 principal elements of a quality study, from preparer expertise and documented methodology to reconciliation of allocated to actual cost and treatment of indirect costs, and 9 elements of a quality report. Our study template, our readiness checks and the CPA Agent’s checklist are keyed to them one for one. Read what the ATG expects.
Support if a study is examined is defined in your engagement letter. Formal representation before the IRS, where it is required, is performed by a federally authorized practitioner.
Primary sources
What this page relies on, as reviewed October 2, 2026.
- IRS Pub 5653, Cost Segregation Audit Techniques Guide (rev. 2-2025)
- AICPA Statements on Standards for Tax Services (eff. 2024-01-01)
- 31 CFR §10.37, Circular 230 written advice (Cornell LII)
Tax law, IRS guidance and state conformity change. Confirm the current rules and how they apply to your property with a qualified professional before acting.