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certain items relating to hospital facilities constructed during
those taxable years, and claimed the investment tax credit
(ITC),3 and depreciation deductions using a 5-year recovery
period. Respondent, however, determined in the notice of
deficiency that a number of those items were structural
components of the related buildings and not personal property,
that those items were not eligible for ITC, and that they must be
depreciated over the same recovery period as the buildings to
which they related. Prior to trial, the parties resolved the ITC
issue, leaving for trial the issue of the proper classification
of the property items for purposes of claiming the depreciation
deduction for the taxable years in issue.
On their tax returns for taxable years ended 1987 and 1988,
petitioners classified as tangible personal property certain
items relating to hospital facilities constructed during those
years and claimed depreciation deductions using a 5-year recovery
period. Respondent, however, determined in the notice of
deficiency that a number of those items were structural
components of the related buildings and that they must be
depreciated over the same recovery period as the buildings to
which they related.
3 The investment tax credit (ITC) was repealed by the Tax
Reform Act of 1986, Pub. L. 99-514, sec. 211(a), 100 Stat. 2166,
effective (subject to transition rules) for property placed in
service after Dec. 31, 1985.
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