Sign Depreciation

[veritas]

Ok,

I was trying to understand why casinos are different than other trades and services. It is because they fall under entertainment classification. So if you have a store, locksmith, auto repair it would fall under my favorite class 57.0 which is 5 years.

[abby]

Use it frequently

Abby,
How do you like the Depreciation Reference Book from the other publication? I have also heard that CCH has a good Depreciation Reference Book, do you know anything about that one.

Sandy

Sandy, I judge it by how often I reach for it - which is frequently. Second only to The Tax Book.

Your link to the Audit Guide for Cost Segragations is exactly what I was looking at in the publication, and I used to scramble to find the source to confirm depreciation standards I partially remembered from previous clients - and it's been great to have one place to go for most of that information.

I have not seen the CCH version, nor any other, so I don't know if there is a superior product out there.

[S T]

More Info

Here is another link which provides court cases and whether the property in question is 1245 property or 1250 property. Might be some good future reference material. http://www.irs.gov/businesses/articl...134671,00.html

Sandy

[veritas]

What you gonna do?

Paul,

What are you going with?

5 Years?
7 Years?
10 Years?
15 Years?
39 Years?

[jainen]

A sign

A sign has no productive purpose; it is purely symbolic. Therefore it is an intangible that can't be depreciated at all.

[veritas]

Signage would be more appropriate

When we say sign are we speaking of astrologic, mathematical, or possibly an omen?

[jainen]

A sign

A sign on a post is an open invitation to vandals and thieves. No reasonable business can expect it to last more than a year, so I always expense them as supplies.

[S T]

Sign Intangible??

Okay Jainen, now these last two posts of yours raise additional questions.

A sign has no productive purpose; it is purely symbolic. Therefore it is an intangible that can't be depreciated at all.

and

A sign on a post is an open invitation to vandals and thieves. No reasonable business can expect it to last more than a year, so I always expense them as supplies.

seems contradictory to your first post today, wherein you stated

I haven't posted anything outrageous or ridiculous recently, so I'll go with 39 an' a half. Attached to the ground, it is indisputably real estate.

So what are we to discern from this information? Wouldn't an exterior sign be a form of advertisement? Yes it is symbolic as it identifies the building or the business (has a name which is usually the business name or the type of business. To expense as supplies would seem to contradict what the IRS has in their guidelines. A large exterior sign on a post and pylon are seldomed vandalized (too high) however a smaller sign might be vandalized. Or on the contrary depending on the area the business is located in, possible wind damage which could be covered by insurance.

Some signs are some type of heavy duty plastic type material that are placed in a "Sign Box" that is adhered to the building that might have some type of electrical/lighting. The tenant might only pay $100 for that sheet of plastic, in which case I would agree expense as a supply. Some of these exterior signs are very expensive. A large sign that has electrical/lighting supply placed on top of a post/pylon in the outer parking lot might cost more than $3000 or maybe as much as $15,000 in which case would you expense as a supply or depreciate in accordance with IRS guidelines which might be separating the cost of the sign/electrical and the post/pylon??

Sandy

[Jiggers]

Advertising Expense?!?

How about advertising expense? That is the purpose of the sign. It may have a life of less than one year.

Seriously, how much are you talking about?

If I had to make a quick decision, I would go with 7 years.

In all audits that I have been through, never once did the auditor question any of the lifes that I assigned to the assets. Neither did they check any of the calculations. And the reason for that? If there is a mistake you can file a 3115 for the current tax year and correct and catchup all depreciation, either increase or decrease depreciation.

[jainen]

If I contradicted myself

>>seems contradictory to your first post<<

If I contradicted myself, that would be outrageous and ridiculous, which would be entirely consistent with my first post.

I trust paulstax is finding this discussion more enlightening than the one on the ATX forum, to wit:

1st response: "It is not a part of a building so it would not be depreciated as improvements to real estate. If you read the definitions of various MACRS recovery periods, you will not find Signs listed. Therefore: I would consider them as 'property which does not have a class life and has not been designated as being in any other class.' Such property is classified as 7-year property. It does not fit anything listed under 5-year property."

2nd response: "...the first thought that went through my mind was 'it is seven years'."

[veritas]

Write it off

In any event other than the concrete and post in the ground I am going to expense it under Sec 179.

[Gene V]

Signs or Billboards

This is from the QF Depreciation Book

Billboards:
Billboards are classified as Section 1245 (personal property) or 1250 (land improvements) based on whether or not they are inherently permanent (Rev. Rul. 80-151).
The IRS found that wooden billboards consisting of a single sign face (made of plywood) nailed to 30-foot poles set in the ground and secured by concrete rings were tangible personal property. An illuminated sign attached to a welded steel frame bolted to a five-foot in diameter steel support column was not tangible personal property. The steel support column was bolted to a steel reinforced concrete foundation that was embedded in the soil five feet deep. The sign was designed to withstand 100 mile-per-hour winds.

Billboards have a 15-year recovery period regardless of whether they are Section 1245 or 1250 property. However, a billboard that is classified as Section 1245 property qualifies for the Section 179 expensing election.

[veritas]

Signage

We are not speaking of billboards but interior or exterior "signs". There is no question whatsoever but they are FIVE year property.

Checkout this link its an eyeopener.

http://www.irs.gov/businesses/article/0,,id=134687,00.html

[jainen]

>>There is no question whatsoever<<

Pretty strong language. Your citation says 5 years for the sign, but 15 years for the post which is probably most of the cost.

[Jan]

We are not speaking of billboards but interior or exterior "signs

I would go with the 15 years depr. I don't think the orginal post was talking about display interior or exterior signs, but a sign on a post.

I have a new client who put up a free standing sign on a post near the edge of his business