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$80,000 expenditure was initially recorded in petitioner’s books
as an equipment purchase and was likely used to purchase
equipment associated with printing.
The record indicates that the property purchased with the
$80,000 did not consist of nonresidential real property, i.e.
section 1250 property which is not residential rental property,
or property with a class life of less than 27.5 years.
Therefore, this Court finds petitioner is not required to
depreciate the $80,000 over a 39-year recovery period pursuant to
section 168(c).
Petitioner did not produce evidence indicating the
equipment had a class life of less than 10 years, which would
allow petitioner to recover the $80,000 over a 5-year period.21
See sec. 168(e)(3)(B); Rev. Proc. 87-56, 1987-2 C.B. 674, as
clarified and modified by Rev. Proc. 88-22, 1988-1 C.B. 785.
Moreover, none of the property petitioner asserted it had
purchased with the $80,000 had a class life of 16 years or more
with an applicable recovery period greater than 10 years. See
sec. 168(c), (e)(1), (3)(D); Rev. Proc. 87-56, supra.
However, petitioner did produce evidence indicating the
$80,000 was used to purchase printing equipment which has a class
life of 11 years. See Rev. Proc. 87-56, 1987-2 C.B. at 679
21 Property with a class life of greater than 4 but less
than 10 years is treated as 5-year property, which has a 5-year
recovery period. Sec. 168(c), (e)(1), (3)(B).
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Last modified: November 10, 2007