Breckenridge cost segregation: CPA reference worksheet

1. State conformity for Colorado

Colorado conforms to federal §168(k) bonus depreciation. The 100% federal bonus restored under OBBBA in 2025 reduces both your federal AND your Colorado state liability in the same year, with no addback or decoupling math. Combined with Colorado's flat 4.40% rate computed on federal taxable income, a Breckenridge cost-seg study produces the full federal-plus-state acceleration in Year 1. This makes Colorado one of the cleanest mid-tax-rate states for cost segregation, alongside Utah (Park City) and several other federal-conforming states.

• State income tax structure: Flat single rate on federal taxable income
• Conforms to federal §168(k) bonus: Yes
• State addback required on federal bonus deduction: No

2. MACRS classification (Rev. Proc. 87-56 + IRS Pub. 946)

The engine assigns MACRS class lives by component category, derived from Rev. Proc. 87-56 asset class tables. Summary:

Component category	Recovery period	IRS asset class (typical)
Personal property: FF&E, decorative finishes, certain electrical (kitchen plugs), carpet	5-year	Asset class 57.0 (distributive trades) or building-specific
Personal property: office equipment, certain agricultural	7-year	Asset class 00.11 (office furniture and equipment)
Land improvements: paving, landscaping, fencing, site lighting, hardscape	15-year	Asset class 00.3 (land improvements)
Residential rental structure	27.5-year SL	§168(e)(2)(A)
Nonresidential real property (office, retail, industrial)	39-year SL	§168(e)(2)(B)

3. Bonus depreciation (current law)

OBBBA (One Big Beautiful Bill Act, signed July 2025) permanently restored 100% bonus depreciation under §168(k) for property placed in service in 2025 and later. Historical: 80% (2023), 60% (2024), 100% (2025 onward). Bonus applies to all assets with MACRS recovery periods of 20 years or less — so all 5, 7, and 15-year components reclassified by the study are bonus-eligible.

4. Engine methodology summary

For a Breckenridge property, the Cost Seg Smart engine:

1. Determines land allocation from county assessor records (if available and reliable) or from a statistical metro → state → national fallback. Premium land floor applies when reconciliation rf_raw exceeds 2.0.
2. Applies RSMeans 2024 base $/SF costs to component categories, scaled by the geographic factor for Breckenridge's metro tier.
3. Applies BLS PPI to adjust RSMeans 2024 dollars to the property's acquisition-date dollars.
4. Applies STR FF&E uplift if the property is a short-term rental (engine treats this differently from long-term rentals).
5. Reconciles component-bottom-up sum against the depreciable basis to produce the final MACRS allocation.
6. Runs 16-check QC validation (PASS / REVIEW / FAIL) with compound-OK downgrade logic before emitting the final study.

Full methodology at costsegsmart.com/methodology.

5. Audit defense documentation

Each Cost Seg Smart study includes written audit defense documentation as part of the deliverable. The package contains:

• Component-by-component cost derivation chain (RSMeans citation → PPI adjustment → geo factor → reconciliation)
• Source records used for land valuation (assessor record citation or statistical methodology disclosure)
• IRS authority citations for each MACRS classification (Rev. Proc. 87-56 asset class + Pub. 946 reference)
• Reconciliation factor narrative explaining any adjustments outside the "A" band

For complex audits requiring expert testimony, Cost Seg Smart engineering review is available on retainer.

6. CPA channel

Cost Seg Smart operates a CPA partner portal for white-label studies, branded client links, and partner margin tracking. If you're advising Breckenridge-area clients regularly, email [email protected].