wrong class life for depreciation

[SueBaby]

I meant that "sidebar" question for jainen (he's prone to pontificate, but he knows lots of stuff, too).

Veritas: It's my understanding that all general tools and appliances used in a business are seven-year property (except calculators, copiers, etc.)

Reading The Tax Book starting on page 9-1 has helped me alot on any depreciation.

Things I didn't even know. It really makes everything clear to me.

Thanks to all and the Tax Book. Looking forward to nexts years book!

[veritas]

I meant that "sidebar" question for jainen (he's prone to pontificate, but he knows lots of stuff, too).

Veritas: It's my understanding that all general tools and appliances used in a business are seven-year property (except calculators, copiers, etc.)

Look at class 57.0 distributive trades and services -5 years

[jainen]

It is what it is

It seems to me like 7-year property would have been better, but we aren't setting it up this year. It is what it is.

[oceanlovin'ea]

Not last 7 years

Most lawn service people's equipment doesn't last 7 years. When you use it every day in mowing yards, it probably doesn't even last 5 years.

My lawn service people buy a new mower about every 3 or 4 years.

Linda F

[JoshinNC]

Well then, I'll just say that new Mercedes will only last 2 years,

and take 1/2 depreciation each year!

[Bees Knees]

My lawn service people buy a new mower about every 3 or 4 years.

That is why you should use Section 179. Most lawn servie people don't buy over $100,000 in new mowers each year.

[Black Bart]

Okay, that's the most

That is why you should use Section 179. Most lawn servie people don't buy over $100,000 in new mowers each year.

practical thing, alright, but the questions remain. Please sift this through your encyclopedic repertoire and render an opinion -- dadgum you-know-who says it's already been decided (by the bumbling client) and won't say which way the hog shoulda went.

5 or 7?

C or F?

The envelope, please.

P. S. I said earlier that it looked like C because my landscaper-client did not raise them--he just had them shipped in on a truck from further south. What if he had actually raised them on a couple of acres? Still C then? Or F?

[oceanlovin'ea]

I say "C"

I would put it on Sch C and leave depreciation alone.

Linda F

[Black Bart]

I would, too,

I would put it on Sch C and leave depreciation alone.

Linda F

but I was tryin' to get Bees to tell us what really should have been done originally.

You and Josh both have good points about the real life of equipment. Weedeaters are another example--no way they'll last seven years.

[veritas]

Lets vote.


I say 5 years for mowers used in landscaping business. Also weedeaters.

Sch C

[Black Bart]

I guess we could, but

Look at class 57.0 distributive trades and services -5 years

I can't tell an agent that my citation is a popular vote from the TTB message board. I was hoping Bees would furnish a reference or something.

By the way, where is that "57" rule? Does it say we should use five years on all this type of stuff? Thanks.

[Bees Knees]

TTB, page 9-8 under 7-year property, "Any property that does not have a class life and has not been designated by law as being in any other class."

In other words, if you can't find it in the table of class lives at the end of Pub 946, then it is 7-year property.

You won't find the words, lawn, mower, or landscape in any of the class lives listed in Pub 946, so by default it is seven year property.

Class life 57 which is five year property says, "Distributive Trades and Services:
Includes assets used in wholesale and retail trade, and personal and professional services.
Includes section 1245 assets used in marketing petroleum and petroleum products."

IRS Announcement 99-82 says appliances, carpeting, furniture, etc. used in a residential rental property activity is Asset Class 57, Distributive Trades and Services. I don't know why, it just does. It seems under that logic, any business can justify calling their equipment Asset Class 57, and therefore it would be considered 5-year property.

So take your pick. A lawn mower is either 7-year, because it is not mentioned in any of the Asset Class Lives, or it is 5-year because any personal or professional service type business, including rental real estate activities can fall under Asset Class 57.

How’s that for settling the issue?

[veritas]

We as a matter of practice haeve used 5 years for all 1245 property that is not otherwise specifically assigned a different life since the inception of macrs. I am talikng about automotive repair shops, service stations, grocery stores, convenience stores any retail or service business. We have never been questioned ever in audit or otherwise.

[Black Bart]

To Bees: That's pretty good.

Thank you very much. Typical IRS dogma, isn't it? Leaves us flipping coins.

What do you think about my landscaper? Is he a farmer or a businessman?

Also (and I'll leave you alone), do you have an opinion as to whether we should keep doin' it wrong if the client wants to go on like that? Isn't he saying "My first accountant was an accomplice in robbing the bank--now I want you to help me keep doing it."

Can he authorize us to do taxes incorrectly? How can he have any standing to do that?

[Black Bart]

It's good news

We as a matter of practice haeve used 5 years for all 1245 property that is not otherwise specifically assigned a different life since the inception of macrs. I am talikng about automotive repair shops, service stations, grocery stores, convenience stores any retail or service business. We have never been questioned ever in audit or otherwise.

that you've never been questioned by IRS on it. I sort of thought it might go like that.

My question above is not so much directed at this particular problem--apparently it's not "wrong" to handle it as you have--but rather I'm interested in whether a client could grant us permission to do something that was wrong simply by dint of the fact that he had done it previously. What if it was 27 year property and he had started using 5 years?