CPA Worksheet for New York City Cost Segregation

1. State conformity for New York

New York partially decouples from federal §168(k), NY has historically required an addback for federal bonus depreciation, with the addback recovered over the regular MACRS schedule for state purposes. NYC has its own local income tax stacked on top. For 2025+ acquisitions under OBBBA's 100% federal bonus, NY-side timing impact is meaningful given the high state-plus-local rates. The federal §168(k) acceleration is unaffected; the state-and-city-side reconciliation is the variable.

Decoupling note: NY has periodically modified bonus depreciation conformity. Verify current-year treatment with your CPA. NYC's local income tax is separate from state but applies on the same federal-adjusted base.

State income tax structure: Progressive NY state schedule plus separate NYC local income tax. Highest combined state-plus-local income tax in the United States.
Conforms to federal §168(k) bonus: No / partial
State addback required on federal bonus deduction: Yes

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 New York City property, the Cost Seg Smart engine:

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.
Applies RSMeans 2024 base $/SF costs to component categories, scaled by the geographic factor for New York City's metro tier.
Applies BLS PPI to adjust RSMeans 2024 dollars to the property's acquisition-date dollars.
Applies STR FF&E uplift if the property is a short-term rental (engine treats this differently from long-term rentals).
Reconciles component-bottom-up sum against the depreciable basis to produce the final MACRS allocation.
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 New York City-area clients regularly, email [email protected].