Oil Tank Depreciation

[Lion]

Client put a new oil tank in her home. She runs a violin studio from a % of her home. How long do I depreciate the oil tank? 7 years? 27.5 years? 39 years? Other?

[Lion]

Bump

Bump......

[S T]

See if this helps

Lion I found this

http://www.taxalmanac.org/index.php/Discussion:Depreciation_Class_for_Oil_tank_in_commercial_rental

Sandy

[Lion]

Confusion

I see that I'm not the only one trying to interpret some of the same published materials. I understand that duct work would be a building component, but you can (and she did) take out an old tank and replace with a new without taking apart her house. Not unlike a water tank. Although, a water tank (holding tank, not a heater) would be 7-year, wouldn't it? Something that's convenient to have in the house, but water can be pumped from the well into the water heater and pipes. But as someone mentioned in your link, the heating system does need a source of fuel; and she can't just pump oil from the oil tanker in the harbor to her furnace. I'd put it in her return as 39-year while I kept looking.

[Lion]

So, I'm told...

So, I'm told on another message board that I can NOT depreciated an oil tank added to a home with OIH. Nor central air. Just the % of oil. Is that right? Since I can depreciate the house % for OIH, do I have to break out things like the oil tank and HVAC and just depreciate the shell of the house? That doesn't sound right at all. So, over how many years do I depreciate a new oil tank in a house with OIH?

[Gary2]

So, I'm told on another message board that I can NOT depreciated an oil tank added to a home with OIH. Nor central air. Just the % of oil. Is that right? Since I can depreciate the house % for OIH, do I have to break out things like the oil tank and HVAC and just depreciate the shell of the house? That doesn't sound right at all. So, over how many years do I depreciate a new oil tank in a house with OIH?

I'm not sure where they got that answer from. As far as I know, you can depreciate the oil tank, but it's a separate depreciation item from the house, and it's depreciated over 39 years starting with when it was placed in service.

See Pub. 587, under "Depreciating Permanent Improvements".

[Kram BergGold]

My view

If this was a rental property I would depreciate it over 5 years.
So I would depreciate it over 7 for a home office. It is not attached to the house. There is just a hose connecting it to the filler pipe outside. I don't see this like a furance or boiler that is totally connected and lasts a long time.

[S T]

Confused as well

I often add improvements for OIH and then it is percentaged out to the percentage of the OIH

T/p won't be able to take the full depreciation, but would they not be allowed to take that percentage related to the percentage of the OIH??

Relating to Gary2's post, I would enter as 39 years life on depreciation - tagged to the OIH (that is they way my computer software works) and it will then compute the amopunt to enter on the OIH.

Sandy

[Lion]

Thank you

Thanx, everyone. I'm leaning to 39 years. But, she didn't call me today with her cost basis for her stock sale, so we're not likely to e-file tonight anyway!