Cost Segregation for U.S. Owners: KBKG vs. EisnerAmper vs. CLA

KBKG vs. EisnerAmper vs. CLA: evidence-quality comparison

CLA publishes commitments on all three decision points; EisnerAmper describes engineering and tax review; and KBKG confirms physical inspection.[3][6][8] The KBKG and EisnerAmper pages do not confirm included audit support, and EisnerAmper recommends asking whether a provider offers site visits.[3][6]

KBKG

• Site inspection: KBKG says it reviews available cost details and blueprints and performs a physical inspection. If records are unavailable, it says component values can be estimated on site.[3]
• Engineering-and-tax review and included audit support: Specify the personnel, review steps and assistance in the engagement letter.

EisnerAmper

• Site inspection: EisnerAmper describes an engineer-led forensic site analysis and recommends asking whether a provider offers site visits.[6]
• Engineering-and-tax review: Engineers identify and quantify assets, assign costs using pricing guides and submit the results to tax and technical review.[6]
• Audit-support terms: EisnerAmper recommends asking whether the provider offers site visits and audit support.[6]

CLA

• Site inspection: After reviewing plans and invoices, CLA says it conducts an on-site interior and exterior inspection and takes photographs.[8]
• Engineering-and-tax review: CLA describes a combined tax-and-engineering team that analyzes project information and allocates indirect construction costs.[8]
• Included audit support: CLA says audit defense is part of the engagement.[8]

Use the IRS quality factors rather than treating provider descriptions as proof of report quality. The guide discusses preparer expertise, methodology, documentation, legal analysis, engineering calculations and reconciliation to actual costs as study-quality factors.[1]

What a CPA-ready report should contain

A CPA handover should include more than a headline allocation. The IRS Cost Segregation Audit Technique Guide, Publication 5653, revised February 6, 2025, can help identify documentation questions. The guide expressly states that it is not a formal statement of law or the IRS’s position and cannot be relied on as legal authority. It may also be affected by changes after its revision date.[1]

Listing a provider here, or following the guide’s report-quality examples, does not establish IRS approval of that provider or acceptance of a study. Ask the CPA to apply the law relevant to the property’s placed-in-service dates and the taxpayer’s circumstances.

• Core report: Confirm the package includes an executive summary or summary letter, narrative report, asset schedule, direct- and indirect-cost schedules, property-unit and cost schedule, engineering procedures, assumptions and limiting conditions, certification and supporting exhibits.[1]
• Method and source evidence: Look for the preparer’s relevant expertise, detailed methodology, supporting records and interviews, consistent asset names and numbering, legal analysis, and engineering take-offs or unit-cost calculations.[1]
• Cost support: Require grouped asset schedules and reconciliation to actual project or acquisition costs so the CPA can trace classifications to the underlying totals.[1]
• Tax treatment: The report should explain its treatment of indirect costs, identify property classified under §1245, and address §263A, accounting-method changes and sampling when applicable.[1]
• Practical exhibits: Windes describes photographs, tax-law support for classifications and an asset list separating building values by depreciation class as report components.[4]

Before filing, have the CPA flag unexplained assumptions, totals that do not reconcile and classifications lacking factual or legal support. Those gaps conflict with the documentation and reconciliation features the IRS associates with a quality study.[1]

Windes advises retaining the report throughout the ownership period because it may be requested as audit evidence.[4]

Records for purchases and improvement projects

The source documents differ depending on whether the property was purchased or constructed, remodeled or improved.

For a purchased property, Windes says records may include:[4]

• Property-condition report
• Appraisal
• American Land Title Association site map or survey
• Closing documents
• Support for the allocation between land and the building

For construction, remodeling or leasehold improvements, records may include:[4]

• Total project costs
• Vendor invoices
• Drawings or models
• General-contractor costs
• Change orders

Give each provider the same document inventory and identify missing records. Available documentation, property characteristics and project complexity can affect study pricing.[4][7]

Provider minimums are screening guidelines

The IRS Cost Segregation Audit Technique Guide does not establish a uniform minimum property value for a study.[1] Provider thresholds are screening or cost-effectiveness guidelines rather than a uniform IRS eligibility minimum.[1][3][4][7]

Windes, for example, describes ideal candidates as having more than $1 million in building-allocated basis or more than $300,000 in renovation, remodeling or leasehold-improvement costs.[4] Other providers may apply different criteria, so compare the projected timing benefit with the quoted fee and ask a CPA whether the study is economical for the relevant tax position.[2][4][7]

Confirm the tax fit before commissioning a study

Warren Averett, Windes and EisnerAmper explain that a study may move qualifying components from the longer recovery periods used for residential rental and nonresidential real property into 5-, 7- or 15-year classes.[2][4][6] They describe this as accelerating the timing of deductions rather than creating new deductions, with some initial benefit potentially reversing through depreciation recapture when the property is sold.[2][4][6]

Studies are commonly performed when property is acquired, constructed, remodeled or placed in service, but providers also describe later studies.[2][3][4][6] A CPA should assess whether net losses, the applicable tax rate, the intended holding period or potential recapture may limit the benefit.[2][4][7] Projected savings and allocation percentages remain provider estimates dependent on the property and taxpayer’s circumstances.[3][4][6]

How to choose among the three providers

1. Define the inspection. The engagement letter should state whether the inspection is on-site, whether photographs are included and how inaccessible areas will be handled. Detailed methodology and supporting documentation are IRS quality-study elements.[1]
2. Identify both disciplines. Ask who performs the engineering analysis, who reviews the federal tax classifications and how each review appears in the report. Preparer expertise and experience are the first quality-study element listed by the IRS.[1]
3. Specify audit support. Among these providers, only CLA expressly states that audit defense is included, but its page does not publish the duration or exclusions.[8]

Secondary differences may also matter. KBKG offers a free preliminary analysis and a calculator; EisnerAmper offers a complimentary benefit estimate and discusses related tax-planning opportunities; CLA identifies possible applications involving prior-year projects and Section 1031 like-kind exchanges.[3][6][8]

What to confirm with each provider

Get a property-specific fee and engagement letter from each shortlisted provider. CLA states that audit defense is included; the written appointment should define its duration, scope, exclusions and any additional charges.[8]

Windes and Patrick Accounting identify factors that may affect pricing, including property size, type, location, value and complexity; available documentation; unusual building features; tenant use; taxpayer-specific issues; and provider expertise.[4][7]

Request a proposal and engagement letter specifying:

• Total fee, pricing basis and payment milestones
• Inspection format and whether photographs are included
• Every report, schedule and supporting exhibit to be delivered
• Delivery timing and the revision process
• Cancellation, refund and termination terms
• Audit-assistance duration, exclusions and additional charges

References

1. Cost Segregation Audit Techniques Guide (irs.gov)
2. What is a Cost Segregation Study? How It Works and Why It Matters) (warrenaverett.com)
3. KBKG | Cost Segregation | Tax Solutions (kbkg.com)
4. FAQs and Answers About Cost Segregation Studies | Windes Insights (windes.com, 2025)
6. 10 Most Common Cost Segregation Questions: Answered (eisneramper.com)
7. Cost Segregation Study: What It Costs and When It's Worth It (patrickaccounting.com)
8. Cost Segregation Studies: CLA (CliftonLarsonAllen) (claconnect.com)