Depreciation term for horse riding arena

[mblatour]

I have a client who has a horse riding/breeding business (Schedule F) who had a horse riding arena (Winkler Arena) built on her property that needs to be depreciated.

I'm thinking 20 years (based on what a barn would be). Any thoughts?

Thanks!
~Becky

[AJsTax]

Arena

I concur with you on 20 years. I am trying to justify in my mind calling it a single purpose agriculture building and I doubt if that would fly. There are a lot of other things the building could be used for without change.

Now the question comes up, what does he know about this type of situation? That is ok, I am fairly new here on the forum. I have lived my entire life on a farm and my first college degree was in production agriculture and yes, I know how to saddle and ride and even used to ride to cut cattle on one place I worked a long time ago.

[DMICPA]

Horse arena

20 years would be reasonable. I did see something on "Land Improvements" that specified 15 years.

The overall tax situation of the owners would be a consideration in deciding the useful life of the asset. If the horse business was a loss and it offset other earned income, a more aggressive time period (15 years) could be used.

[mblatour]

more info.

I just spoke to my client and asked about the material the arena was constructed from. It is a system of heavy duty poles that has a heavy duty canvas stretched over it. The canvas has a 15 year warranty.

The arena is fastened by concrete footings along the perimeter, but client states that it can be moved if the need be.

The size is 34' in height at the peak, 60' wide and 130' long.

Any other thoughts as to the time frame for depreciation?

[mblatour]

Dmicpa.....

This client has had this "business" for 20 years. She is also a full time LPN. She has been claiming a loss for many years. Last years loss was $13,000.

[DMICPA]

Horse Arena

15 years sounds even more reasonable now.

Having had clients in this business, your client must keep some kind of records to be able to demonstrate that this is a business and not a hobby.

Advertising, permits and licenses, a set of books (double or single entry) and legitimate expenses are a must. To have many years of losses catches the attention of the tax authorities. This type of enterprise carries a higher audit risk.

[fliszt]

Question to members:

I was wondering if there is any way possible to set this up as 7 year property?? I know of a tax preparer that did exactly that.
Larry

[mblatour]

Here's some more info:

Here's a link to the manufacturer of the building. Take a look at the following paragraphs "how long with the cover last?" and "do you have a warranty".

This may change the life of the depreciation allowed.

http://www.winklercanvasbldg.com/winklerstructures/faq.php

Thanks for any input.

Becky

[fliszt]

from the photos

at the website you posted, I can't see anyway around calling it 20 year property.
Larry

[AJsTax]

Arena

With all due respect, I cannot see how the building would qualify as a land improvement, which is what would qualify for a 15 year schedule. Nor will it qualify as a single purpose, 10 year class. Therefor the only one left is the 20 year class.
If it was easy to tear down and move you might be able to convince an auditor that it qualified for 7 year treatment, but to move one involves totally dismantling the entire structure and in the end costs more than just buying a new one.