E1: Cost Segregation for Tax Insurance

In this episode of Covered, Dorian Hunt from Leo Berwick hosts Joe Volk and Joe Zenk to discuss tax insurance considerations in renewable energy projects, focusing on cost segregation. Cost segregation, crucial for determining Investment Tax Credit (ITC) eligibility, categorizes costs into those eligible and ineligible for tax credits. Volk explains how tax insurance underwriters validate these classifications by assessing if they’re substantiated with source documentation and excluding unsupported claims. Zenk outlines his process, including reviewing detailed project documents (e.g., EPC contracts, engineering drawings) to ensure ITC classifications align with IRS standards. The team highlights key challenges, emphasizing attention to details like indirect costs and dual-use assets.