Eight errors that turn a good study into an examination problem

1. Classifying building HVAC as personal property

Comfort conditioning is a structural component. Dedicated process cooling serving specific equipment is not. Firms that blur this to lift the percentage create exactly the pattern examiners look for.

2. Treating general site grading as a land improvement

Clearing and grading that prepares raw land for its first use is inseparable from non-depreciable land. Grading directly associated with a specific depreciable improvement generally follows it. Sweeping all earthwork into 15-year property is not supportable.

3. Failing to reconcile to capitalised basis

Total costed must equal what is on the books, with indirect costs allocated across components. If the study's total does not tie to the schedule, the schedule you file does not tie either.

4. Ignoring the mid-quarter convention test

A large fourth-quarter reclassification can push all personal property additions for the year onto mid-quarter. In a year where bonus is elected out, this materially changes the number.

5. Applying the wrong bonus percentage in a look-back

Recomputation must use the bonus rate applicable to the placed-in-service year — 100%, 80%, 60%, 40% depending on the year — not the current rate applied retroactively. This is the most common technical error in look-back computations.

6. Missing the second Form 3115 copy

The automatic change procedures require the form with the return and a separate copy filed as the revenue procedure directs. Missing the second filing is avoidable and creates unnecessary exposure.

7. Not carving out land properly

Or worse, treating land improvements as part of the non-depreciable land allocation. Paving is not land. Land is not depreciable. Both errors happen, in both directions.

8. No site inspection, undisclosed

A study produced entirely from documents, presented as though an inspection occurred, is a documentation problem waiting to surface. Where travel is impractical, run a structured virtual inspection and say so in the report. Disclosure is not weakness; concealment is.