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Segra

Methodology

How every Segra report is produced, in enough detail to reproduce.

Effective April 19, 2026.

Regulatory framework

  • Revenue Procedure 87-56 — asset classes for MACRS depreciation.
  • Revenue Procedure 2004-34 — safe-harbor guidelines for compliance.
  • Treasury Regulation §1.167(a)-1 — general depreciation rules.
  • Treasury Regulation §1.263(a)-1 — capital expenditure and repair allocation.
  • IRC §168(k) — bonus depreciation eligibility and percentages.
  • IRC §481(a) — method-change catch-up adjustment math (applies to prior-year filings).
  • IRS Publication 5653 — Cost Segregation Audit Techniques Guide (Feb 2025).
  • Tax Cuts and Jobs Act (TCJA, 2017) — bonus-depreciation acquisition cutoff of September 28, 2017.
  • One Big Beautiful Bill Act (OBBBA, 2025) — 100% bonus depreciation restored for property placed in service on or after January 19, 2025.

Tier 1 — DIY Self-Serve

DIY uses a deterministic calculator, not an AI pipeline. You supply the purchase price, land value, and property type. The calculator applies a property-type-default asset allocation curve drawn from our internal asset library — typical 5/7/15/27.5-or-39-year percentages for STRs, small multifamily, commercial, etc. — then normalizes line-item totals so they reconcile exactly to the building basis you entered. The result is a full MACRS schedule and a branded PDF. No document parsing, no engineer review; CPA review recommended before filing.

Tier 2 — AI Report (also foundational to Tier 3)

Document ingestion

The closing disclosure, improvement receipts, and property photos you upload are sent directly to a vision-capable Claude model — no separate OCR pre-processing step. Claude reads the document pages natively and extracts purchase price, acquisition date, property type, and line items from construction receipts or settlement statements.

Valuation method — Residual Estimation + RCNLD

We use the Residual Estimation Method endorsed in Chapter 3, Section C.4 of the ATG. Total property basis is allocated across components using their Replacement Cost New (RCN) adjusted by time, location, physical depreciation, and functional obsolescence.

Component Allocated Value = (Component Adjusted Value / Σ Adjusted Values) × Total Basis
RCNLD = RCN × Time × Location × Physical × Functional

Cost sources

  • RSMeans Building Construction Cost Data — structural, HVAC, electrical.
  • Craftsman National Repair & Remodeling Estimator (2026) — materials, labor, overhead.
  • PriceSearch market research — appliances, lighting, specialty equipment.

A 10% general-contractor overhead markup is applied to RSMeans and Craftsman estimates, not to PriceSearch.

Classification decisions

Every line item is evaluated against the Whiteco factors (permanence test), the HCA tests (sole-justification test from Hospital Corporation of America v. Commissioner, 109 T.C. 21), and the necessary-vs-decorative framework from Rev. Rul. 79-181 to determine Section 1245 (personal property, accelerated 5/7/15-year) vs Section 1250 (structural, 27.5- or 39-year).

Land-value decomposition

Every report separates land from building basis before any MACRS classification. We try three methods in order and use the first that fits the property: assessor ratio (county tax assessment), appraisal method (if a recent appraisal is in the uploaded docs), or comparable-sales residual. The method chosen and the split are both disclosed on the Land Value page of the PDF.

Bonus depreciation

For every property, we check the acquisition date against the TCJA cutoff (acquisitions before September 28, 2017 are ineligible for the post-TCJA percentages), then check the placed-in-service date against the OBBBA 100% window. The applicable bonus rate and the eligibility reasoning are both shown on the Depreciation Schedule page — no hidden assumptions.

Method change — Form 3115 / Form 4562 (Appendix E)

If your property was placed in service in a prior year and depreciated on a non-cost-segregated basis, claiming the reclassified basis requires a method change under Rev. Proc. 2022-14 (automatic-consent DCN 7), filed on Form 3115 with a §481(a) catch-up adjustment. If the property was placed in service this year, Form 4562 is used instead (no method change required). Every study ships with Appendix E — a CPA filing worksheet that determines which form applies, computes the §481(a) catch-up by running both depreciation schedules (old SL vs new cost-seg) for every prior year and summing deltas, and emits per-class pre-fills for the filing CPA. Source: IRS Rev. Proc. 2015-13 and Rev. Proc. 2022-14.

Tier 3 — Engineer review

A US-licensed Professional Engineer independently reviews every classification decision, verifies the 13-element ATG compliance checklist (ATG Chapter 4), and signs the final report. The engineer’s license number, state of licensure, and signature block appear on the cover page and on the certification page. Any classification the engineer overrides is flagged in Appendix B alongside the AI’s original rationale.

Reproducibility

Every report ships with four appendices that let any competent tax professional reproduce the math:

  • Appendix A — full methodology deep-dive.
  • Appendix B — per-asset detail cards with source, rationale, and IRS citation for every line item.
  • Appendix C — reference documents (Rev. Proc. 87-56 table excerpt, Pub 946 MACRS tables, TCJA/OBBBA timeline, the 13-element ATG checklist).
  • Appendix D — expenditure classification schedule aligning every line item to its MACRS life.
  • Appendix E — Form 3115 / Form 4562 CPA filing worksheet (Tier 2 and Tier 3 only).