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Field Directive on the Planning and Examination of Cost Segregation Issues in the Auto Dealership Industry

LMSB Control No. 4-0208-006
Impacted IRM 4.51.5

February 25, 2008

MEMORANDUM FOR  LMSB INDUSTRY DIRECTORS
                                        DIRECTOR, PREFILING AND TECHNICAL GUIDANCE
                                        DIRECTOR, FIELD SPECIALISTS
                                        DIRECTOR, INTERNALTIONAL COMPLICANCE
                                        LMSB AREA COUNSEL

FROM:                              /s/ Charlie Brantley
                                          Industry Director
                                          Heavy Manufacturing and Transportation                                         

SUBJECT:                      Field Directive on the Planning and Examination of  Cost
                                         Segregation Issues in the Auto Dealership Industry

This Directive is intended to provide technical guidance to effectively reduce exam time and taxpayer burden.  The matrix contained in attachment A is a new chapter in the Cost Segregation Audit Technique Guide.  This matrix will provide assistance to agents in the classification and examination of a taxpayer who is recovering costs through depreciation of tangible property used in the Auto Dealership Industry.

Background

The crux of cost segregation is determining whether an asset is I.R.C. §1245 property (shorter cost recovery period property) or §1250 property (longer cost recovery period property).  The most common example of §1245 property is depreciable personal property, such as equipment.  The most common examples of §1250 property are buildings and building components, which generally are not §1245 property.[1]

The difference in recovery periods has placed the Internal Revenue Service and taxpayers in adversarial positions in determining whether an asset is §1245 or §1250 property.  Frequently, this causes the excessive expenditure of examination resources.  The Director for the Heavy Manufacturing and Transportation Industry chartered a working group to address the most efficient way to approach cost segregation issues specific to the Auto Dealership Industry.  The group produced the attached matrix and related definitions as a tool to reduce unnecessary disputes and foster consistent audit treatment.

Issue Tracking

UIL Code 168-20-00 Classification of Property.

Planning and Examination Risk Analysis

The Auto Dealership Industry Matrix recommending the categorization and general depreciation system recovery period of various assets is attached as Exhibit A.  (for recovery periods under IRC §168(g) alternative depreciation system, see Revenue Procedure 87-56, 1987-2 CB 674). If the taxpayer’s tax return position for these assets is consistent with the recommendations in Auto Dealership Matrix (Exhibit A), examiners should not make adjustments to categorization and recovery periods.  If the taxpayer reports assets differently, then adjustments should be considered. 

Please consider the Cost Segregation Audit Techniques Guide in its entirety.  Refer especially to Appendix Chapter 6.3, which provides examples and general rules for asset classification. 

Internal Communications

Questions regarding the development of the Cost Segregation issue for Auto Dealerships should be addressed to the Motor Vehicle – Retail; Technical Advisor Team.     

This LMSB Directive is not an official pronouncement of the law or the position of the Service and cannot be used, cited or relied upon as such.

Attachment: Exhibit A

 


[1] I.R.C. §1245 can apply to certain qualified recovery nonresidential real estate placed in service after 1980 and before 1987.  See I.R.C. §1245(a)(5).

 

Attachment

LMSB DIRECTIVE ON COST SEGREGATION IN THE AUTO DEALERSHIP INDUSTRY

EXHIBIT A

This matrix, which is part of the Cost Segregation Audit Techniques Guide, is intended to provide direction to effectively utilize resources in the classification and examination of property used in the operation of an Auto Dealership.  General fact patterns specific to this industry have been considered in the classification of these assets and may not be applicable to other industries.  Similarly, asset classification guidance issued for other industries is based on the general fact pattern for that industry and may not be applicable to an Auto Dealership situation.  For examination techniques and historical background related to this issue, refer to the Cost Segregation Audit Techniques Guide.

NOTE: In the case of certain leasehold improvement property, the classifications in this directive are superseded to the extent that the American Jobs Creation Act of 2004 modifies IRC Section 168.  Thus, a 15-year straight line recovery period should replace the recovery period shown in the following matrix if the asset is “qualified leasehold improvement property" (as defined in IRC Section 168(e)(6)) placed in service by the taxpayer after 10/22/04 and before 1/1/08.

 

Asset

Description                   

Property Type

Recovery Period

Awnings & Canopies

Readily removable overhang or covering, often of canvas or plastic, used to provide shade or cover over a storefront, a window, or a door; or used inside a structure to identify a particular department or selling area.  Also includes canopies designed to protect employees and gasoline fueling equipment from weather conditions and to act as advertising displays that are anchored with bolts and are not attached to buildings or other structures.  Does not include permanent canopies that are an integral part of a building’s structural shell, such as porte-cochere (covered entrances for vehicle drive-up) and porticos (covered porches), or over docks.  See also Concrete Foundations & Footings, Loading Docks, and Signs.

1245

57.0 Distributive Trades and Services -- 

5 Years

Bollards & Guardrails

Bollards (heavy steel posts generally filled with concrete) and Guardrails mounted in a concrete foundation or sturdily affixed to the ground so as to create a protective barrier around areas of the building vulnerable to vehicle traffic such as Service Bay doors, glass storefront partitions, doors, door frames, HVAC components, building corners, etc.  Bollards and Guardrails can be located inside or outside the building are permanently attached and are intended to be permanent. (Placement to protect the building). 

1250

Building or Building Component –

39 Years

Bollards (heavy steel posts generally filled with concrete) and Guardrails mounted in the ground or concrete to protect machinery and equipment from vehicular damage, or to prevent vehicles from trespassing onto specific areas.  Placement to protect land improvements and non-building items such as signs, sign poles, flagpoles, trees, as well as inventories of autos and trucks. Bollard and Guardrails are permanently attached and intended to be permanent.

Note* asset class 00.3 Land improvements includes both section 1245 and 1250 property per Rev. Proc. 87-56.

See Note*

00.3 Land Improvements –

15 Years

Bollards & Guardrails

Bollards (heavy steel posts) and Guardrails, not permanently attached and not intended to be permanent, placed near machinery and equipment inside buildings that can be damaged by vehicular traffic.  Bollards and Guardrails withstand vehicular impact and protect personal property items such as: forklift recharging stations, service write-up station, hazardous material storage racks, service department air compressors, etc.

1245

57.0 Distributive Trades and Services -- 

5 Years

Cabinetry

Includes cabinets and counters constructed or installed within buildings that relate to the general operation and maintenance of the building.  For example, cabinets and counters used to house or enclose electrical equipment, plumbing components, sinks, fire protection systems, and other structural elements of a building which are designed to remain in place.  Includes counters and cabinets in restrooms, Employee Break Areas, Employee Coffee Bars, and Office Areas.    See also Restroom Accessories.

1250

Building or Building Component –

39 Years

Includes cabinets and counters related to the retail activity and not related to the operation and maintenance of the building.  For example: retail counters and cabinets, display shelving and cabinets, customer reception counter, Customer Lounge Area cabinets and counters, Sales Area cabinets and counters, parts counters, etc.  See also Retail Fixtures and Office Furniture.

1245

57.0 Distributive Trades and Services -- 

5 Years

Computers

Processors (CPU), direct access storage device (DASD), tape drives, desktop and laptop computers, CRT, terminals, monitors, printers, and other peripheral equipment.  Excludes Point of Sale (POS) systems and computers that are an integral part of other equipment (e.g. fire detection, heating, cooling, or energy management systems, etc.).  See also Point of Sale (POS) Systems.

1245

00.12 Information Systems –

5 Years

Concrete Foundations & Footings

 

Foundations and footings necessary for the proper setting of the building.  Excavation and backfill for building foundations.  Excavation and backfill for special equipment foundations where contained within the footprint of the building.  Includes formwork, reinforcement, concrete block, and pre-cast or cast-in-place work.

1250

Building or Building Component –

39 Years

Foundations or footings for signs, light poles, and other land improvements (except buildings).    Includes excavation, backfill, formwork, reinforcement, concrete block, and pre-cast or cast-in-place work.  Note* asset class 00.3 Land improvements includes both section 1245 and 1250 property per Rev. Proc. 87-56.

See Note*

00.3 Land Improvements –

15 Years

Concrete Foundations & Footings

 

A foundation, pad, or footing for machinery or equipment that is so specially designed that it is in essence a part of the machinery or equipment.  Any function as a building component must be strictly incidental to the function as an essential part of the item of machinery or equipment that necessitated the special design of the foundation.  Increased thickness of the building’s slab alone is not sufficient to show that the foundation, pad, or footing is so specially designed that it is in essence a part of the machinery or equipment it supports. Excavation and backfill are not included where the foundation, pad, or footing is contained within the footprint of the building.  Includes formwork, reinforcement, concrete block, and pre-cast or cast-in-place work. 

1245

57.0 Distributive Trades and Services –

5 Years

Data Handling Equipment

Includes adding and accounting machines, calculators, copiers, and duplicating machines.  Excludes computers and computer peripheral equipment. 

1245

00.13 Data Handling Equipment, except Computers –

5 Years

Doors

Interior and exterior doors, regardless of decoration, including but not limited to, double opening doors, fire doors and fire containment safety doors, overhead and roll-up doors, revolving doors, roll-up or sliding wire mesh or steel grills, Service Bay doors, and related door hardware (such as doorknobs, closers, kick plates, hinges, locks, automatic openers, computerized door locks, etc.).  See also Millwork.

1250

Building or Building Component –

39 Years

Special lightweight, double action doors installed to prevent accidents in a heavily trafficked area.  For example, flexible doors, or clear or strip curtains used between stock and selling areas.

1245

57.0 Distributive Trades and Services –

5 Years

Electrical

 

Includes all components of the building electrical system used in the operation or maintenance of the building or necessary to provide general building services such as electrical outlets of general applicability and accessibility, lighting, heating, ventilation, air conditioning, and electrical wiring.   Includes but is not limited to general purpose outlets connected to copy machines, fax machines, personal computers, and general purpose outlets in the Break Rooms, Coffee Rooms, Lounges, etc.

1250

Building or Building Component –

39 Years

Electrical

 

Includes electrical outlets specifically associated to a particular item of machinery or equipment located in the Service Department, Body Shop, and Showroom.  Special electrical connections which are necessary to and used directly with a specific item of machinery or equipment or connections between specific items of individual machinery or equipment; such as dedicated electrical outlets, wiring, conduit, and circuit breakers by which machinery and equipment is connected to the electrical distribution system.   Does not include electrical outlets of general applicability and accessibility.  See Chapter 5 of the Cost Segregation Audit Techniques Guide for allocation examples.

Examples include:  Dedicated electrical service to lifts, jacks and Service Bay equipment; paint booths; car washes; oil change stations; frame straightening equipment and Body Shop equipment.   Also includes dedicated electrical to Customer Areas, such as suspended television monitors.

1245

57.0 Distributive Trades and Services -- 

5 Years

Elevators and Escalators

Elevators and escalators, which include handrails and smoke baffles, are permanently affixed to the building and intended to remain in place.  They relate to the operation or maintenance of the building and are structural components.

Includes elevators to move autos in multi-story dealerships.

1250

Building or Building Component –

39 Years

Energy Management Systems

Energy management systems control all energy-using systems in a building, automatically checking occupancy schedules, reading temperatures, and re-circuiting light levels, causing all heating, cooling and lighting equipment to operate so as to minimize energy costs.  Includes, for example, detection devices such as smoke, motion and infrared devices, photocells, foil and contact switches, pressure switches, proximity alarms, sensors, alarm transmitting controls, data gathering panels, demand controllers, thermostats, computer controls, outside air economizers, occupancy sensors, electronic ballasts, and all related wiring and conduit.  May also provide for fire and burglary protection.

1250

Building or Building Component –

39 Years

Exit Signs

Signs posted along exit routes within buildings that indicate the direction of travel to the nearest exit.  These signs typically read "EXIT" and may have distinctive colors, illumination, or arrows indicating the direction to the exit.

1250

Building or Building Component – 39 Years

Fire Protection & Alarm Systems

Includes sensing devices, computer controls, sprinkler heads, piping or plumbing, pumps, visual and audible alarms, alarm control panels, heat and smoke detection devices, fire escapes, fire doors, emergency lighting and signage, and wall mounted fire extinguishers necessary for the protection of the building. 

1250

Building or Building Component –

39 Years

Fire Protection Equipment

Includes special fire detection or suppression systems directly associated with a piece of equipment and designed and used for protection against a particular hazard created by the business activity (such as in the Body Shop).

1245

57.0 Distributive Trades and Services -- 

5 Years

Floor Coverings

 

Floor covering affixed with permanent adhesive, nailed, or screwed in place.  Examples include ceramic or quarry tile, marble, paving brick, and other coverings cemented, mudded, or grouted to the floor; epoxy or sealers; and wood flooring.

1250

Building or Building Component –

39 Years

Floor covering that is installed by means of strippable adhesives.  For the auto dealership industry, all vinyl composition tile (VCT), sheet vinyl, and carpeting will be treated as not permanently attached and not intended to be permanent. 

1245

57.0 Distributive Trades and Services -- 

5 Years

Floors

Includes concrete slabs and other floor systems.  Floors include special treatments applied to or otherwise a permanent part of the floor.  For example, reflective flooring, express lube and reconditioning area floors, and epoxy floor paint or sealant applied directly to the concrete slab to keep a sealed, water and oil resistant, easy-to-clean surface.  See also Floor Coverings.

1250

Building or Building Component –

39 Years

Floor Pits & Trenches

 

Work areas built at a lower level than the garage floor to allow technicians to stand beneath the vehicles while working. These floor pits allow the technician to service a vehicle from below (for example, to change automotive oil, radiator and transmission fluids).  Work areas include pits and trenches with concrete floors and walls with overhead access to vehicles.  Some of these floor pits resemble full basements allowing multiple technicians access to vehicles above.

1250

Building or Building Component –

39 Years

Equipment included in the floor pits & trenches such as lifts, trays, and piping for supply fluid systems; waste fluid recovery and containment systems; and automotive fluid waste tanks.

1245

57.0 Distributive Trades and Services -- 

5 Years

Heating, Ventilating & Air Conditioning (HVAC)

Includes all components of a central heating, ventilating and air conditioning system not specifically identified elsewhere. HVAC systems that are installed not only to meet the temperature and humidity requirements of machinery, but are also installed for additional significant purposes, such as customer comfort and ventilation, are building components.

1250

Building or Building Component –

39 Years

Only separate HVAC units that meet the sole justification test are included (i.e., machinery the sole justification for the installation of which is the fact that such machinery is required to meet temperature or humidity requirements which are essential for the operation of other machinery or the processing of materials or paint).   For example, special ventilation for paint booths; Body Shop and Service Area exhaust removal systems.   Allocation of HVAC is not appropriate. 

1245

57.0 Distributive Trades and Services -- 

5 Years

Inventory Display

Equipment

 

Includes inventory displays that are permanently added to the land.  Examples include concrete ramps and pedestals, and exterior “turntable” displays that are permanently affixed, etc. 

Note* asset class 00.3 Land improvements includes both section 1245 and 1250 property per Rev. Proc. 87-56.

See Note*

00.3 Land Improvements –

15 Years

Includes inventory displays that are not permanently added to the land and intended to be moved.  Examples include metal ramps, portable “turntable” displays, etc.

1245

57.0 Distributive Trades and Services -- 

5 Years

Landscaping & Shrubbery

Landscaping that will not be replaced contemporaneously with a related depreciable asset or that will not be destroyed when the related depreciable asset is replaced.  Examples include landscaping, shrubbery, trees, plant foliage, or sod placed around the perimeter of the tract of land.

 

Land

Landscaping that will be replaced contemporaneously with a related depreciable asset or that will be destroyed when the related depreciable asset is replaced.  Examples include depreciable landscaping, shrubbery, trees, plant foliage, or sod placed around the parking lot in outdoor Sales Area.  Includes associated irrigation systems (sprinkler systems). 

Note* asset class 00.3 Land improvements includes both section 1245 and 1250 property per Rev. Proc. 87-56.

See Note*

00.3 Land Improvements –

15 Years

Light Fixtures - Interior

 

Includes lighting such as recessed and lay-in lighting, night lighting, and exit lighting, as well as decorative lighting fixtures that provide substantially all the artificial illumination in the building or along building walkways.  For emergency and exit lighting, see Fire Protection & Alarm Systems.

1250

Building or Building Component –

39 Years

Special display lighting specifically for highlighting automobiles in the Showroom, or highlighting displays of merchandise, decorative lighting, and specific task lighting in the service area.  Decorative light fixtures are light fixtures, such as neon lights or track lighting, which are decorative in nature and not necessary for the operation of the building.  If the decorative or task lighting were turned off, the other sources of lighting would provide sufficient light for operation of the building.  If the decorative or task lighting is the primary source of lighting, then it is section 1250 property.

1245

57.0 Distributive Trades and Services - 

5 Years

Light Fixtures - Exterior

 

Exterior lighting is considered section 1250 property to the extent that the lighting relates to the maintenance or operation of the building.  This category includes building mounted lighting to illuminate walkways, entrances, parking, etc. (whether decorative or not).

1250

Building or Building Component –

39 Years

Pole mounted or freestanding outdoor lighting system to illuminate sidewalks, Employee Parking Area, Customer Parking Area, and Product Display Parking Areas. See also Poles

Note* asset class 00.3 Land improvements includes both section 1245 and 1250 property per Rev. Proc. 87-56. 

The Revenue Procedure establishes two broad categories of depreciable assets: (1) asset classes 00.11 through 00.4 that consist of specific assets used in all business activities; and (2) asset classes 01.1 through 80.0 that consist of assets used in specific business activities. An asset described in both an asset and an activity category is classified in the asset category.

See Note*

00.3 Land Improvements –

15 Years

Exterior lighting that highlights the merchandise and building exterior, for example a floodlight, spotlight, and uplighting which do not illuminate parking areas or walkways.  Does not include the pole mounted lighting systems used to illuminate Employee Parking Area, Customer Parking Area, and Product Display Parking Areas.   See also Poles.

1245

57.0 Distributive Trades and Services -- 

5 Years

Loading Docks

Includes bumpers, permanently installed dock levelers, plates, seals, lights, canopies, and overhead doors used in the receiving and shipping of merchandise.  See also Awnings & Canopies.

1250

Building or Building Component –

39 Years

Includes equipment such as compactors, conveyors, hoists and balers.

1245

57.0 Distributive Trades and Services -- 

5 Years

Machinery & Equipment

 

Tangible personal property not covered elsewhere, which is in the nature of machinery or equipment.  Includes, for example, machinery and equipment located in the Body Shop, Parts Department and Service Departments such as paint booths; exhaust systems; air compressors; pneumatic tools systems (including support equipment such as piping and related pumps); tanks and related pumps; automotive fluid and waste fluid recovery systems; above-ground lifts; car wash systems, etc.  Does not include structural components of a building or other inherently permanent structure.  See also Concrete Foundation & Footings; Electrical; and Plumbing.

1245

57.0 Distributive Trades and Services -- 

5 Years



Millwork 

General millwork is all building materials made of finished wood (e.g., doors and frames, window frames, sashes, porch work, mantels, panel work, stairways, and special woodwork).  Includes pre-built wooden items brought to the site for installation and items constructed on site such as restroom cabinets, door jambs, moldings, trim, etc.

1250

Building or Building Component –

39 Years

Decorative millwork is the decorative finish carpentry in the building.  Examples include detailed crown moldings, lattice work placed over finished walls or ceilings, and merchandise display cabinets.   The decorative millwork serves to enhance the overall décor of the dealership and is not related to the operation of the building.   Cabinets and counters in the restroom are excluded from this category. See also Cabinetry and Restroom Accessories

1245

57.0 Distributive Trades and Services -- 

5 Years

Office – Furniture (includes  Communication Equipment and Hook-ups)

Includes desks, chairs, cashiers safes, credenzas, file cabinets, tables (or other furniture such as workstations and the Sales Manager’s office tower) and shelving, including cost of shelves in record storage room.  Also includes telephone equipment, fax machines, and other communications equipment.  Does not include communications equipment included in other asset classes in Rev. Proc. 87-56.

1245

00.11 Office Furniture, Fixtures, and Equipment –

7 Years

Parking Lots

 

Depreciable improvements directly to or added to land, whether such improvements are section 1245 or 1250.  Grade level surface parking and base area usually constructed of asphalt, brick, concrete, stone or similar material.  Also includes bumper blocks, curb cuts, curb work, striping, concrete landscape islands, gates, fences, truck parking ramps and staging areas, and traffic control systems (such as traffic lights and detectors, card readers, parking equipment, etc.). Includes Employee Parking, Customer Parking, and New and Used Vehicle Parking Areas.

Note* asset class 00.3 Land improvements includes both section 1245 and 1250 property per Rev. Proc. 87-56.

The Revenue Procedure establishes two broad categories of depreciable assets: (1) asset classes 00.11 through 00.4 that consist of specific assets used in all business activities; and (2) asset classes 01.1 through 80.0 that consist of assets used in specific business activities. An asset described in both an asset and an activity category is classified in the asset category.

See Note*

00.3 Land Improvements –

15 Years

Parking Structures

Any structure or edifice the purpose of which is to provide parking space.  Includes, for example, garages, parking ramps, or other parking structures.

1250

Building or Building Component –

39 Years

Plumbing

 

All piping, drains, sprinkler mains, valves, sprinkler heads, water flow switches, restroom plumbing fixtures (e.g. toilets) and piping, sinks, electric water coolers, and all other components of a building plumbing system (water or gas) not specifically identified elsewhere. Includes floor drains which ultimately lead to the municipal sewer system or site septic system.

1250

Building or Building Component –

39 Years

Special plumbing connections which are necessary to and used directly with a specific item of machinery or equipment or connections between specific items of individual machinery or equipment.  Includes dedicated piping, valves, and hook-ups by which machinery and equipment is connected to the building or other inherently permanent structure's plumbing distribution system(s). 

Example includes plumbing hook-ups to the car wash system.   Does not include plumbing hook-ups of general applicability and accessibility.  See also Floor Pits & Trenches.

1245

57.0 Distributive Trades and Services -- 

5 Years

Point of Sale (POS) Systems

A register or terminal based data collection system used to control and record all sales (cash, charge, COD, gift cards, layaway, etc.) at the point of sale.  Includes cash registers, computerized sales systems and related peripheral equipment, satellite systems, scanners, and wands.  See also Electrical for hook-ups.

1245

57.0 Distributive Trades and Services -- 

5 Years

Poles

Light poles for parking areas and other poles poured in concrete footings or bolt-mounted for signage, flags, etc.  Note* asset class 00.3 Land improvements includes both section 1245 and 1250 property per Rev. Proc. 87-56. 

See also Bollards & Guardrails; Signs; and Light Fixtures – Exterior.

See Note*

00.3 Land Improvements –

15 Years

Premise (Pylon) Sign - Exterior

 

Pylons made of concrete, brick, wood frame, stucco, or similar materials usually set in the ground or on a concrete foundation, and usually used for signage. Note* asset class 00.3 Land improvements includes both section 1245 and 1250 property per Rev. Proc. 87-56.   See also Poles.

See Note*

00.3 Land Improvements –

15 Years

Includes only the sign face and/or message screen and related components.  Includes brand displays and dealership brand image enhancements.

1245

57.0 Distributive Trades and Services -- 

5 Years

Restroom Accessories

Includes paper towel dispensers, electric hand dryers, towel racks or holders, cup dispensers, purse shelves, toilet paper holders, soap dispensers or holders, lotion dispensers, sanitary napkin dispensers and waste receptacles, coat hooks, handrails, grab bars, mirrors, shelves, vanity cabinets, counters, ashtrays, baby changing stations, and other items generally found in public restrooms that are built into or mounted on walls or partitions.

1250

Building or Building Component –

39 Years

Restroom Partitions

Includes shop made and standard manufacture toilet partitions, typically metal, but may be plastic, sheetrock, wall board, or other materials.

1250

Building or Building Component –

39 Years

Retail Accessories

Accessories used to better display merchandise, advertising, and brochures that are not held for sale.  Includes assets such as audio/video display devices, graphic rear projection displays, artwork (if depreciable), Showroom displays, decorative mobile props, holiday decorations, lamps, mirrors, pictures, plaques, potted plants, and props (such as sporting equipment or memorabilia, etc.).  Does not include non-depreciable art, antiques, or collectibles).

1245

57.0 Distributive Trades and Services -- 

5 Years

Retail

Fixtures

Includes assets such as the retail counter space within the Body Shop, shelving to store parts and supplies, mechanical retrieval system or equipment for parts and supplies, clocks, including time clocks, counter space related to the Parts Department, including retail counter space and cashier, etc., shelving systems, shelf racks in the Service Department tool room, counter space within the Service Department (including dispatcher counter and parts counter for technicians) and other dealership fixtures needed in the business operation that are not a building component.   Also includes fixtures and shelving for vehicle brand clothing and accessory Retail Shop, children’s Play Area improvements for customers, fixtures for inventory information centers, and express lube after care business fixtures.

1245

57.0 Distributive Trades and Services -- 

5 Years

Roof

All elements of the roof including but not limited to joists, rafters, deck, shingles, vapor barrier, skylights, trusses, girders, and gutters.  Determination of whether decorative elements of a roof (e.g. false dormers, mansard) constitute structural building components depends on their integration with the overall roof, not their load bearing capacity.  If removal of the decorative element results in the direct exposure of building components to water, snow, wind, or moisture damage, or if the decorative element houses lighting fixtures, wiring, or other structural components, then the decorative elements are part of the overall roof system and are structural components of the building.

1250

Building or Building Component –

39 Years

Security Systems

 

Includes security equipment for the protection of the building (and its contents) from burglary or vandalism and protection of employees from assault.  Examples include window and door locks; card key access systems; keyless entry systems; security cameras, recorders, monitors and related equipment; perimeter and interior building motion detectors; security lighting; alarm systems; and security system wiring and conduit.

1250

Building or Building Component -- 39 Years

Electronic surveillance systems used to track and monitor tangible items, e.g., devices used to protect New and Used automobile inventory.  Includes scanners, electronic gates, surveillance cameras, recorders, monitors and related equipment.

1245

57.0 Distributive Trades and Services -- 

5 Years

Sidewalks & Curbs

 

Depreciable improvements directly to or added to land, whether such improvements are section 1245 or 1250.  Sidewalks and curbs are usually constructed of concrete, asphalt, stone or similar material.  Note* asset class 00.3 Land improvements includes both section 1245 and 1250 property per Rev. Proc. 87-56.

See Note*

00.3 Land Improvements –

15 Years

Signs

 

Exit signs, restroom identifiers, room numbers, and other signs relating to the operation or maintenance of a building.

See also Exit Signs.

1250

Building or Building Component – 39 Years

Interior and exterior signs used to display brand or theme identity. For example, interior signs to identify departments or exterior signs to display trade names or trade symbols.

For pylon signs, includes only sign face.  See also Poles and Premise (Pylon) Sign - Exterior.

1245

57.0 Distributive Trades and Services -- 

5 Years

Site Preparation Grading & Excavation

 

In general, land preparation costs include the one time cost of clearing and grubbing, site stripping, mucking, and fill or excavation to allow development of land.  Clearing and grubbing is the removal of debris, brush, trees, etc. from the site.  Stripping is the removal of the topsoil to provide a stable surface for site and building improvements.  Mucking is the removal of unstable soils and materials to insure a solid base for intended improvements.   The grading of land involves moving soil for the purpose of producing a more level surface to allow development of the land.

 

Land

Clearing, grading, excavating and removal costs directly associated with the construction of buildings and building components are part of the cost of construction of the building and depreciated over the life of the building.  This includes building the showroom facility on a mound foundation for higher visibility and enhanced visual impact for the dealership building. 

1250

Building or Building Component –

39 Years

Clearing, grading, excavating and removal costs directly associated with the construction of sidewalks, parking areas, roadways and other depreciable land improvements are part of the cost of construction of the improvements and depreciated over the life of the associated asset.  Note* asset class 00.3 Land improvements includes both section 1245 and 1250 property per Rev. Proc. 87-56.

See Note*

00.3 Land Improvements –

15 Years

Site Utilities

Site utilities are the systems that are used to distribute utility services from the property line to the building. Includes water, sanitary sewer, gas, electrical services, and data and communication lines.

1250

Building or Building Component –

39 Years

Site Work

Site work includes curbing, paving, general site improvements, fencing, depreciable landscaping, roads, sewers, sidewalks, site drainage and all other site improvements, such as storm water retention basins, not directly related to the building.  See also Landscaping & Shrubbery.  For sanitary sewers, see Site Utilities.  Does not include land preparation costs, see also Site Preparation Grading & Excavation.

Note* asset class 00.3 Land improvements includes both section 1245 and 1250 property per Rev. Proc. 87-56.

See Note*

00.3 Land Improvements –

15 Years

Sound Systems

Equipment and apparatus, including wiring, used to provide amplified sound or music. For example, public address by way of paging a customer or employee.  Excludes applications linked to fire protection and alarm systems.  

1245

57.0 Distributive Trades and Services -- 

5 Years

Trash Enclosures

Enclosures for waste receptacles that are attached to the building.  Typically constructed of the same materials as the building shell with either interior or exterior access.  These trash enclosures are an integral part of the building shell and cannot be moved without damage to the underlying building.

1250

Building or Building Component –

39 Years

Freestanding enclosures for waste receptacles, typically constructed on a concrete pad with its posts set in the concrete.  Serves both safety and decorative functions.  Note* asset class 00.3 Land improvements includes both section 1245 and 1250 property per Rev. Proc. 87-56.

See Note*

00.3 Land Improvements –

15 Years

Wall Coverings

Includes interior and exterior paint; ceramic or quarry tile, marble, stone, brick and other finishes affixed with mortar, cement or grout; paneling, wainscoting and other wood finishes affixed with nails, screws or permanent adhesives; and wall panels such as fiberglass, stainless steel and plastic wall panels.

1250

Building or Building Component –

39 Years

Strippable wallpaper that causes no damage to the underlying wall or wall surface.

1245

57.0 Distributive Trades and Services -- 

5 Years

Walls - Exterior

Includes all exterior walls and building support regardless of construction materials.  Exterior walls may include columns, posts, beams, girders, curtain walls, tilt up panels, studs, framing, sheetrock, insulation, windows, doors, exterior façade, brick, masonry, etc.  Also includes drive-through bay, windows, and doors.

1250

Building or Building Component –

39 Years

Walls - Interior Partitions

Includes all load bearing interior partitions regardless of construction.  Also includes non-load bearing partitions regardless of height (typically constructed of studs and sheetrock or other materials) that divide or create rooms or provide traffic control.  Includes rough carpentry and plaster, dry wall or gypsum board, and other finishes.

1250

Building or Building Component –

39 Years

Walls - Interior Partitions

Interior walls where the partition can be 1) readily removed and remain in substantially the same condition after removal as before, or 2) intended to be moved and reused, stored, or sold in their entirety.

1245

57.0 Distributive Trades and Services -- 

5 Years

Windows

Exterior windows, including store front windows, and exterior glass partitions. Includes interior glass partitions from floor to ceiling or as a part of an interior wall.

1250

Building or Building Component –

39 Years

Window Treatments

Window treatments such as drapes, curtains, louver, blinds, post construction tinting and interior decorative theme décor which are readily removable.

1245

57.0 Distributive Trades and Services -- 

5 Years

Page Last Reviewed or Updated: 11-Jun-2013