"Small" storage buildings

[Black Bart]

No response on the other thread; maybe a new one...

Backyard tool sheds (Home Depot, Lowe's, etc.): Depreciate for seven years, 39 years, or something else? If less than 39, how justified?

[ChEAr$]

Depends

No response on the other thread; maybe a new one...

Backyard tool sheds (Home Depot, Lowe's, etc.): Depreciate for seven years, 39 years, or something else? If less than 39, how justified?

hah! Actually though, I would make a judgment based on the qualify of the item itself.
If a small 6 x 8 shed just for tools storage in a back yard, or business premises of course,
7 years. If something more substantial, 15 years for larger and heavier items of
PERSONAL PROPERTY. IOW, these aren't real estate under local law around these
parts.

[erchess]

You're not giving us the whole story BB

In what business and for what purpose are the structures being used?

I will say that something that is not attached to a foundation and hard to move off of it the way a house or mobile home is doesn't count as real estate by anybody's definition.

I will also say that in my experience and according to my training seven years is a class life the IRS will live with if the abridged CLADR Tables you worked with don't clearly list something applicable elsewhere

[les grans]

Once upon a time, long long ago when "footing the trial balance" was a day-long ritual for newby junior accountants, my boss - who was really really old, like thirty-five or forty, maybe - there was this thing called "Investment Tax Credit" that kicked back to you some money (from other taxpayers) as a credit on your tax return when you bought and placed in service personal i.e. not real depreciable property. IRC sections 38 and 48, Form 3468 and the dreaded recapture on Form .. uh .. 2555.... Ah, I remember it like yesterday... or, truth be told, I remember it *better* than yesterday. But I digress...
Long story short, my boss decided to describe these "small storage sheds probably not really connected to their foundation" as *containers*. Voila, problem solved: ITC taken and we got a really short depreciation life, too. Probably pre-ACRS.... Who else remembers?

[Snaggletooth]

Pasture Scooter

Les Gran - talk about calling a fish a steak...

I had farmers buy four-wheelers. Some of them would use them to ride to the back 40, as in the summer the cattle would not come up to the feeding barn every afternoon.

We couldn't deduct a four-wheeler or ATV. But we deducted Pasture Scooter with a 7 year life.

Today a "pasture scooter" would be considered listed property.

[Black Bart]

In what business?

Any C-E-F

...for what purpose are the structures being used...

Tool storage

I will say that something that is not attached to a foundation and hard to move off of it the way a house or mobile home is doesn't count as real estate by anybody's definition.

Most have a metal floor and are simply set out on the grass, but some "double-wide" size units have a concrete slab poured for them. I just wonder where it becomes material if they're bolted to the slab or are a certain size.

I will also say that in my experience and according to my training seven years is a class life the IRS will live with if the abridged CLADR Tables you worked with don't clearly list something applicable elsewhere.

[okie1tax]

Still think you want to see http://www.irs.gov/pub/irs-drop/rr-03-54.pdf about gasoline pump canopies. If a concrete foundation is poured, it is land improvement and 15 year. If the building attached "permanently" and is not of a nature whereby it could be easily dismantled and reused, it would be "real" property. If it can be easily moved, it is "personal" and would be, I think 7 year.

[ChEAr$]

Like yesterday

Once upon a time, long long ago when "footing the trial balance" was a day-long ritual for newby junior accountants, my boss - who was really really old, like thirty-five or forty, maybe - there was this thing called "Investment Tax Credit" that kicked back to you some money (from other taxpayers) as a credit on your tax return when you bought and placed in service personal i.e. not real depreciable property. IRC sections 38 and 48, Form 3468 and the dreaded recapture on Form .. uh .. 2555.... Ah, I remember it like yesterday... or, truth be told, I remember it *better* than yesterday. But I digress...
Long story short, my boss decided to describe these "small storage sheds probably not really connected to their foundation" as *containers*. Voila, problem solved: ITC taken and we got a really short depreciation life, too. Probably pre-ACRS.... Who else remembers?

Aye, I do have fond memories of a certain dog breeder and having to use form 2555
when some of the *****es died - studs, too. (Stud? for a dog? I dunno)

[okie1tax]

Aye, I do have fond memories of a certain dog breeder and having to use form 2555
when some of the *****es died - studs, too. (Stud? for a dog? I dunno)

How about Form 4255? I can't seem to find anything on the Foreign Income Exclusion that helps in recapture.

[les grans]

Bingo!! I had this nagging feeling...

[Bees Knees]

TTB page 9-9:

Planning Tip: Cost Segregation. It can be advantageous to allocate
as large a cost as possible to personal property when both personal
and real property are purchased in the same transaction. The greater
amount that can be allocated to personal property, the more quickly the
cost can be recovered through depreciation.
Buildings include structural components such as walls, fixed partitions,
floors and ceilings. However, courts have considered the following facts
and circumstances to determine whether items are structural components
of a building or personal property. In Hospital Corp. of America v.
Commissioner, 109 T.C. 21, the court considered these factors:
• Is the property capable of being moved, and
has it in fact been moved?
• Is the property designed or constructed to
remain permanently in place?
• Are there circumstances which tend to show
that the property may or will be moved?
• How substantial a job is removal of the property?
• How much damage will the property sustain upon
its removal?
• What is the manner of affixation of the land?
In one case, a raised floor that was constructed to permit wiring and
duct work was deemed not to be a structural component of a building,
but more closely related to a computer installation. The asset
was therefore determined to be personal property and the cost was
allowed to be recovered along with the cost of the computer over five
years [Chief Counsel Advice 200033002]. However, in a case where
removal of a raised floor would require renovation of the building, the
floor was considered a structural component, and the cost had to be
depreciated along with the rest of the building over 39 years. [Chief
Counsel Advice 200110001]

Using the above logic of the courts, I would say if you can move the storage shed with ease from one location to the other, and you do not intend to make it a permanent fixture of the land, then it is 7 year property. If it is a shed that is not easy to move and you have no intention of taking it with you when you move, then it is 39 year property. Unless you are a farmer, in which case they have special rules for single purposes agricultural structures and the like.

[Black Bart]

Thank you very much.

TTB page 9-9:
Using the above logic of the courts, I would say if you can move the storage shed with ease from one location to the other, and you do not intend to make it a permanent fixture of the land, then it is 7 year property. If it is a shed that is not easy to move and you have no intention of taking it with you when you move, then it is 39 year property. Unless you are a farmer, in which case they have special rules for single purposes agricultural structures and the like.

You're a gentleman and a scholar; hereinafter I shall refer to you as Judge Learned Head.