Leo and Evelyn Trentadue - Page 12
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makers, it is petitioners’ understanding that the industry has
treated trellising and drip irrigation systems as equipment
depreciable over 7 to 10 years. In Sonoma County, California,
grapevines become subject to property tax 4 years after planting,
whereas trellises, stakes, and irrigation systems are subject to
such tax beginning in the year of installation.
The parties disagree about whether trellising, irrigation
systems, or a well are to be classified as machinery or land
improvements for purposes of depreciation. A depreciation
deduction is allowed for the exhaustion, wear and tear, and
obsolescence of property used in a trade or business. Sec.
167(a).1 To some extent, the recovery period determines the
amount of the depreciation deduction. Sec. 168. The recovery
period is based on the “class life” of the property. Sec.
168(c), (e). There is no question in this case about whether the
subject assets are depreciable.
For purposes of this case, “class life” is the asset
guideline class in which such property is classified under Rev.
Proc. 83-35, 1983-1 C.B. 745, and restated in Rev. Proc. 87-56 to
1 Unless otherwise specified, section references are to the
Internal Revenue Code as amended and in effect for the years
under consideration. Rule references are to this Court’s Rules
of Practice and Procedure.
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Last modified: November 10, 2007