What is inside a funeral home cost segregation report
The full structure of the deliverable, section by section, with the numbers from one illustrative sample study on an 11,800 SF funeral home and chapel. Every figure on this page is transcribed from that report, so you can hold your own study against it.
What this is. An illustrative sample report on a representative funeral home, watermarked ILLUSTRATIVE SAMPLE on every one of its 69 pages. There is no client in it, no address, and no photography of a real facility. It is not a customer's study, redacted or otherwise, and we do not publish one without that customer's named approval. What is real is the method, the section structure, the authorities cited and the schedules: those are what a paying engagement receives.
The property the sample is built on
A facility chosen to be ordinary rather than favourable: a purpose-built single-story chapel of middling age, no crematory, and no on-site residence. Two of those three facts hold the result down rather than up.
What the sample allocated, class by class
This is Section 3 of the report. The four class amounts add to the depreciable basis exactly, which is the check to run on any study: if the classes do not reconcile to basis, something has been double counted or dropped.
| MACRS class | Allocated basis | % of basis |
|---|---|---|
| 5-year personal property Rev. Proc. 87-56 Cl. 57.0, data cabling Cl. 00.12 Preparation room dedicated exhaust and ventilation, preparation room dedicated plumbing, floor drains and stainless fixtures, walk-in refrigeration, chapel audio-visual and sound reinforcement, chapel and visitation decorative and accent lighting, casket and urn selection room display lighting and millwork, family lounge kitchenette equipment and casework, visitation and lounge decorative finishes, arrangement office and chapel data cabling | $250,300 | 12.27% |
| 7-year personal property Rev. Proc. 87-56 Cl. 57.0 Chapel pews and seating for 150, arrangement room and office furniture, freestanding casket and urn display fixtures | $49,700 | 2.44% |
| 15-year land improvements Rev. Proc. 87-56 Cl. 00.3 Service parking lot paving, base and striping for 92 spaces, processional drive lanes and porte-cochere approach paving, landscaping and irrigation, site and parking lot lighting, site drainage, curbing and walks, exterior monument sign structure and foundation | $208,650 | 10.23% |
| 39-year real property IRC §1250 structural components Shell, roof, general comfort HVAC, general electrical and general plumbing, restrooms, fire sprinklers, and the porte-cochere structure itself | $1,531,350 | 75.07% |
| Total depreciable basis | $2,040,000 | 100% |
| Accelerated property, 5-, 7- and 15-year | $508,650 | 24.93% |
Read this as one result, not as a range. This funeral home reclassified 24.93% of basis, which sits inside the 18–30% of basis we model for the type, and says nothing about where any other facility lands. The two things carrying this one are visible in the table above: a preparation room with process exhaust, dedicated plumbing and refrigeration, and a 2.1-acre site whose 92-space lot and processional lanes are sized for a full chapel service rather than for an 11,800 SF building. A converted residence on a small lot has neither. Age, finish level, equipment, recent improvements and the land share all move the answer, which is why we model the actual property before quoting anything.
Why a funeral home reclassifies where it does
A funeral home is three buildings sharing a roof: a licensed preparation room, a chapel, and a lot sized for a procession. The study works through them one at a time, because the answer is decided by room rather than by building. Funeral service is asset class 57.0, distributive trades and services, under Rev. Proc. 87-56, so qualifying personal property in the facility is 5-year.
Moves off the 39-year schedule
- Preparation room: dedicated exhaust and ventilation serving the embalming station, dedicated plumbing, floor drains and stainless fixtures
- Walk-in refrigeration: box, compressor, condenser and its dedicated circuit
- Chapel: audio-visual and sound reinforcement, service streaming, decorative and accent lighting
- Selection room: casket and urn display lighting, millwork and casework
- Family lounge: kitchenette equipment and casework, decorative finishes
- Offices: data cabling, racks and terminations, asset class 00.12
- 7-year: chapel pews and seating, arrangement room and office furniture, freestanding display fixtures
- 15-year: service parking, processional drive lanes, site and parking lot lighting, landscaping and irrigation, drainage, curbing and walks, the monument sign
Stays 39-year
- Structural shell, foundation and roof
- General comfort HVAC serving the building rather than a process
- General electrical service and general plumbing
- Restrooms, including partitions and fixtures
- Fire sprinklers and life-safety systems
- The porte-cochere structure itself, as distinct from the approach paving under it, which is a land improvement
Three quarters of this sample's basis stayed here, which is the ordinary outcome for a building of this kind and the reason the accelerated figure is a quarter rather than a half.
The site is the part that surprises people. At 10.23% of basis, the 15-year bucket is large for an 11,800 SF building, and it is large for a reason specific to the use: the lot has to hold the cars for a full chapel service and give a procession somewhere to form. A facility with a crematory would add the retort and its dedicated exhaust to the 5-year column; this one has none, and the sample reflects that.
The 69 pages, section by section
Fourteen numbered sections and six appendices. The page ranges below are this sample's; length scales with the facility and with how much documentation an engagement carries.
Executive summary
The headline result, the class-by-class allocation, and the two subsections a CPA reads first: 1.1 Year 1 Tax Impact Analysis and 1.2 Allocation Bridge. This is where the $508,650 of accelerated property and the estimated $539,735 of total first-year depreciation are stated and sourced.
Property summary
The subject property as the study saw it: area, year built, acquisition and placed-in-service dates, the room program, the site, and the inputs each figure rests on.
Cost allocation summary
The allocation by class and by category, with the statement that every component allocation reconciles exactly to the depreciable basis.
Detailed component breakdown
Every identified component with its class life, allocated amount, authority and evidence basis. Includes 4.1 Facilities Summary by CSI Division, 4.2 Indirect Cost Allocation and 4.3 Reconciliation of Costs.
Engineering rationale by category
Why each category was classified as it was, written per category rather than per line, so the reasoning can be followed without reading the full schedule.
MACRS depreciation schedules
Year-by-year deduction tables for each class, with the bonus treatment applied in the placed-in-service year, formatted to carry onto Form 4562.
NPV analysis (illustrative only)
The time value of moving the deductions forward, labeled illustrative because it depends on a discount rate and a tax rate the taxpayer supplies.
Depreciation recapture considerations
What reclassification means on a later sale, including the §1245 treatment of the personal property the study identifies.
Sensitivity considerations
How the result moves when the inputs move, which is the section that answers whether a different facility would land somewhere else.
Methodology and basis of analysis
The engineering-method cost approach, the data sources used, and the IRS Pub 5653 interview and documentation expectations the study is written against.
Legal authority for asset classification
The statutory and administrative authority behind each classification position taken in the schedule.
Schedule for fixed asset ledger entry
The result restated in the form a fixed asset ledger wants it, so the classifications can be booked without retyping the schedule.
Tax practitioner review considerations
The decisions the report deliberately leaves to the CPA, including the filing method: original return, amended or superseding return, or a Form 3115 method change.
Conclusion
The result restated with its limitations, and what would change it.
Appendices
A, cost derivation summary. B, IRS ATG quality elements mapped to where the report addresses each one. C, Rev. Proc. 87-56 and the IRC framework. D, case law and IRS rulings. E, audit documentation and support. F, exhibits and supporting documentation.
What this sample does not contain, and why
There is no §481(a) lookback workpaper in it. The subject property was acquired and placed in service in 2025, so there is no prior-year depreciation to catch up, and the report states plainly that it does not calculate a §481(a) adjustment. A study on a facility held for years does add that computation and the Form 3115 reference workpaper, because that is the whole point of a lookback. There is also no equipment-list cross-reference section: that is a data center convention, where the buyer hands over UPS and chiller schedules, and it does not apply here. We would rather tell you what is absent than describe a section you would not receive.
What an examiner would look for
The IRS Cost Segregation Audit Techniques Guide, Pub 5653, sets out the principal elements an examiner reviews when a study is challenged. The sample maps to them section by section, and Appendix B does that mapping explicitly rather than leaving it to the reader:
- Engineering analysis, Sections 5 and 10, the rationale by category and the method it rests on
- Component-level documentation, Section 4, every component with its class life, allocated amount, authority and evidence basis
- Cost derivation, Section 4.2 and Appendix A, indirect cost allocation and the derivation of the unit costs, from industry-standard construction cost data
- Asset-class mapping, Sections 3 and 11, each position tied to its Rev. Proc. 87-56 class with the authority stated on the line
- Reconciliation, Section 4.3, the check that the allocated components add back to the depreciable basis
- Audit documentation and support, Appendices B, D, E and F
Audit support ships with the report and does not expire: the workpaper exhibits, the classification rationale per component, internal technical review, and written answers to your CPA's questions about our methodology. Full scope at /audit-defense/.
Report questions
Is this a real customer's funeral home study?
Why did this sample reclassify 24.93% when the funeral home page says 18–30% of basis?
Does this sample include a §481(a) lookback workpaper?
What reclassifies in a funeral home, and what stays on the 39-year schedule?
How long is the report, and how is a funeral home study priced?
Can I get the full PDF?
See your facility's numbers, not a sample's.
Funeral homes are scoped per engagement rather than self-served, so send the facility details and we will come back with a proposal. If you have more than one location, tell us which was acquired most recently and which has been held longest: those two are usually handled differently.
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