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@gsa11 wrote:

I would think that the IRS might ask the question of did the original 1031 property have those same 5 and 7 year property items included in it?

I checked one of the cost seg studies and did some back of the envelope math; it looks like using the cost seg study would actually lower the depreciation expense by $100 and create a lot more work for me.

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If I remember correctly, one of the Regulations say that 'other' stuff can fall into the exchange as long as it is only a minor portion of the sale.

I suspect you may have miscalculated something.  Switching some of the dollar amount from a long Recovery Period to a short Recovery Period will only increase depreciation, and even more so with Bonus depreciation.

Future years will have reduced depreciation, but the first year will have significantly more depreciation.

With that being said, how much it will benefit the taxpayer varies.  If it is a passive activity, the first-year losses may be carried forward until that is passive income.