Relevant Court Cases - Cost Segregation Study - Cost Segregation Partners - Accelerated Depreciation

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APPENDIX - CHAPTER 6.4 - RELEVANT COURT CASES

Chapter 6.3 | Table of Contents | Chapter 6.5

INTRODUCTION

This chapter is intended to assist examiners in determining whether certain assets constitute § 1245 or § 1250 property. In addition to the legal framework presented in Chapter 2, the court cases listed below provide further guidance. Although the issue in many of the cited cases below relates to ITC, these cases remain important in determining whether property constitutes § 1245 property for purposes of ACRS and constitutes tangible personal property for purposes of MACRS. Hospital Corporation of America and Subsidiaries v. Commissioner, 109 T.C. 21, 54-55 (1997), acq. on this issue and nonacq. on other issues, 1999-2 C.B. xvi.

Unfortunately, there are no bright-line tests for distinguishing § 1245 property from § 1250 property. All of the cases are factually intensive and quite often the opinions of the courts conflict. Therefore, the examiner’s ultimate determination generally cannot be based merely upon reading one case. In addition to reading all the cases on point, the Service’s position must be reviewed and followed; as well, the examiner must also consider whether the Service has acquiesced to a particular position or case.

ARRANGEMENT OF INFORMATION

This chapter contains three attachments to assist examiners in locating pertinent cases that address specific assets:

Case Citations for the Relevant Court Cases;

Table by Case Name (Asset Descriptions by §§ 1245/1250 determinations); and

Table by CSI Master Format Division (Case Name & Asset Description by §§ 1245/1250 determinations)

CASE CITATIONS

AC Monk
A.C. Monk & Co. v. United States, No. 78-126-CIV-4, 1981 U.S. Dist. LEXIS 17764 (E.D.N.C. Mar. 30, 1981), aff’d in part, rev’d in part, vacated and rem’d, 686 F.2d 1058 (4th Cir. 1982), on remand, 577 F. Supp. 4 (E.D.N.C. 1983).
Albertson’s
Albertson’s v. Commissioner, 94-1 U.S. Tax Cas. (CCH) P50,016; 73 A.F.T.R.2nd (RIA) 558 (9th Cir. 1993); rev’g. 95 T.C. 415 (1990).
Bod-Nol
Boddie-Noelle Enters. v. United States, 96-2 USTC ¶ 50,627 (Fed. Cl. 1996), aff’d without published opinion, 132 F. 3d 54 (Fed. Cir. 1997).
Centr Citrus
Central Citrus Co. v. Commissioner, 58 T.C. 365 (1972).
Circle K
Circle K Corp. v. Commissioner, T.C. Memo. 1982-298.
Cons Freight
Consolidated Freightways, Inc. v. Commissioner, 74 T. C. 768 (1980), aff’d in part and rev’d in part, 708 F.2d 1385 (9th Cir. 1983).
Consolidated Freightways, Inc. v. United States, 79-2 USTC ¶ 9440 (Ct. Cl. 1979).
Consolidated Freightways, Inc. v. United States, 620 F.2d 862 (Ct. Cl. 1980).
Dixie Man
Dixie Manor, Inc. v. United States, 79-2 USTC ¶ 9469 (W.D. Ky. 1979), aff’d, 81-1 USTC 9332 (6th Cir. 1981).
Duaine
Duaine v. Commissioner, T.C. Memo. 1985-39.
Grinalds
Grinalds v. Commissioner, T.C. Memo. 1993-66.
HCA
Hospital Corp. of Am. & Subs. v. Commissioner, 109 T. C. 21 (1997), acq. in part and nonacq. in part, 1999-2 C.B. xvi.
Ill Cereal
Illinois Cereal Mills, Inc. v. Commissioner, T.C. Memo. 1983-469, aff’d, 789 F.2d 1234 (7th Cir. 1986), cert. denied, 479 U.S. 995 (1986).
King Radio
King Radio Corp. v. United States, 486 F.2d 1091 (10th Cir. 1973), aff’g D.C. No. KC-3320).
La Petite
La Petite Academy v. United States, 95-1 USTC ¶ 50,193 (W.D. Mo. 1995), aff’d in unpublished opinion, 72 F.3d 133 (8th Cir. 1995).
LL Bean
L.L. Bean, Inc. v. Commissioner, T.C. Memo. 1997-175, aff’d, 145 F.3d 53 (1st Cir. 1998).
Mallinckrodt
Mallinckrodt, Inc. v. Commissioner, T.C. Memo. 1984-532, aff’d, 778 F.2d 402 (8th Cir. 1985).
McManus
McManus v. United States, 700 F. Supp. 994 (W.D. Wis. 1987), aff’d, 863 F.2d 491 (7th Cir. 1988).
Metro
Metro Nat’l Corp. v. Commissioner, T.C. Memo. 1987-38.
Minot Fed
Minot Fed. Sav. & Loan Ass’n v. United States, 313 F. Supp. 294 (D.N.D. 1970), aff’d, 435 F.2d 1368 (8th Cir. 1970).
Morrison
Morrison, Inc. v. Commissioner, T.C. Memo. 1986-129, aff’d, 891 F.2d 857 (11th Cir. 1990).
Munford
Munford, Inc. v. Commissioner, 87 T.C. 463 (1986), aff’d, 849 F.2d 1398 (11th Cir. 1988).
Piggly Wiggly
Piggly Wiggly Southern, Inc. v. Commissioner, 84 T.C. 739 (1985), aff’d, 803 F.2d 1572 (11th Cir. 1986), nonacq., 1988-2 C.B. 1.
Publix
Publix Supermarkets, Inc. v. United States, 92-1 USTC ¶ 50,240 (Cl. Ct. 1992).
Schrum
Schrum v. Commissioner, T.C. Memo. 1993-124, aff’d in part and vacated in part, rem’d, 33 F.3d 426 (4th Cir. 1994), on remand, T.C. Memo. 1995-103, aff’d in part and vacated in part without published opinion, 114 F.3d 1177 (4th Cir. 1997).
Scott Paper
Scott Paper Co. v. Commissioner, 74 T.C. 137 (1980).
Shoney’s
Shoney’s South, Inc. v. Commissioner, T.C. Memo. 1984-413, action on dec., 1986-048 (September 19, 1986).
TI
Texas Instruments Inc. v. Commissioner, T.C. Memo. 1992-306.
Walgreen
Walgreen Co. & Subs. v. Commissioner, 103 T.C. 582 (1994), rev’d, rem’d, 68 F.3d 1006 (7th Cir. 1995), supplemental op., T.C. Memo. 1996-374.
Westroads
Westroads, Inc. v. Commissioner, 69 T.C. 682 (1978), acq., 1979-2 C.B. 2.
Whiteco
Whiteco Industries, Inc. v. Commissioner, 65 T.C. 664 (1975), acq., 1980-2 C.B. 2.

TABLE BY CASE NAME

Case Name	Master Format Division	Asset Description	1245	1250

AC Monk	15700	Louvered Wall to Boiler	X
	03000	Truck Apron	X
	10800	Lavatory Furnishings		X
	15300	Fire Hose Stations		X
	13120	Special Rooms	X
	13120	Storage Sheds	X
	16400	Elec. Dist. to lights & machines		X
	03000	Concrete RR dock		X
	13030	Green storage room		X
Albertson’s	15700	HVAC system		X
	05100	Raised roof		X
Bod-Nol	09500	Suspended Ceilings		X
	06170	Ext. Mansard-Marlite roof panels		X
	16400	Electrical to equipment		X
	15400	Plumbing to equipment		X
	15700	Kitchen HVAC		X
	08830	Decorative Mirror		X
	08582	Carousel drive-up window unit		X
Centr Citrus	15700	Blowers	X
	15700	Coolers	X
	16400	Elec. dead front panel		X
	16300	Elec. Transformer to facilities		X
	16400	Elec. Gutter plus ends & cutting	X
	16400	Elec. Dist: adapters/relays/fuse	X
	16140	30 amp. Switch	X
	16300	Elec. Transformer for sweet rm	X
	16140	Elec. Outlets	X	X
	16510	Fluorescent fixtures	X	X
	16510	Spotlight and flood lamps	X	X
	16510	Moisture-proof lamps	X
	16300	Elec. Transformer for damper	X
	16510	Ballast lights	X
Circle K	13030	Cold storage rm.		X
	15700	Air conditioning units (roof)		X
Cons Freight	03000	Raised concrete loading dock		X
	08330	Overhead doors		X
	16510	Light fixtures - mercury vapor		X
	02825	Dock fence	X
Dixie Man	15700	Air conditioning/Heating (roof)		X
	09250	Rm partition (drywall/wood stud)		X
Duaine	03100	Concrete slab behind counter		X
	09300	Floor tile		X
	09300	Wall tile		X
	15100	Water lines to cooking table,etc	X
	15100	Gas lines to cooking elements	X
	15100	Connecting fixtures to appliance	X
	15100	Copper drain lines from refrig.	X
	16510	Ornamental light fixtures		X
	16140	Elec. Outlets to equip.	X


Grinalds	15700	Air conditioning units		X
	09250	Partitions (cubical type)		X
	09250	Walls (interior)		X
	10800	Walls (restroom)		X
	15400	Plumbing – restroom		X
	16200	Elec. Conduit & Recep. – Restrm		X
HCA	16300	Primary & secondary elec. dist.	X	X
	16400	Branch elec. dist.	X	X
	16200	Branch elec. – TV equip.	X
	16700	Telephone wiring, jacks	X
	16200	Elec. Wiring – inter-com equip.	X
	09680	Carpeting	X
	09720	Vinyl wall covering	X
	09600	Vinyl wall covering	X
	15400	Kitchen water pipe, grease trap	X
	15400	Plumbing for x-ray	X
	15850	Kitchen hood & exhaust sys.	X
	05720	Patient corridor handrails	X
	16510	Over-bed recessed lights		X
	10650	Accordion doors/partitions	X
	10800	Bathroom acces., plastic mirrors		X
	09510	Acoustical ceiling tile		X
	15510	Steam boilers & acces.		X
Ill Cereal	16400	Elec. Distribution system (95%)	X
King Radio	10630	Partitions (ceiling height)	X
	10630	Glazed partitions	X
	10630	Movable partition sys.	X
LL Bean	13140	Storage rack sys. (supp. roof)		X
	03000	Super-flat concrete slab		X
	13140	Roofing & wall panels		X
	16400	Electrical system		X
	15300	Sprinkler system		X
	15764	Heating/ventilation system		X
	13138	Mezzanine system		X
La Petite	09250	Wall panels-porc.enamel/gyp.bd)		X
	06170	Mansard roof		X
	02825	Playground fence		X
	16520	Exterior façade lighting sys.		X
	15300	Fire protection sys.		X
	15300	Heat & smoke detectors		X
	16530	Emergency lights		X
	10426	Illum. Exterior signs		X
	10800	Child’s restrm./handicap cabinet		X
	11442	Grease trap to counter		X
	16200	Elec. Service to counter		X
	02825	Dumpster encl: fence & concrete		X
	15780	Thermal recov. Sys.–water heater		X
	08300	Doors(kitchen, by-pass, Dutch)		X
Mallinckrodt	09250	Partitions (gyp. drywall)		X
McManus	13120	Ten unit hangar bldg.		X
	08344	Hangar doors		X
	08970	Glass/door storefront partitions	X
	10800	Toilet partitions		X
	09510	False ceilings & grids		X
	16510	Lay-in lighting facilities		X
	16520	Exterior security lighting	X
	16510	Grow lights	X
	16510	Accent decor lighting (exterior)	X
	06400	Cabinets (plastics & hardware)	X
	02810	Sprinkler heads		X
Minot Fed	10630	Pre-manuf. Wall partitions	X
	08100	Door units (in partitions)	X
Morrison	16530	Emergency lighting	X
	16440	Kitchen panel boards	X
	15400	Kitchen hand sinks		X
	15400	Kitchen water piping	X
	08380	Eliason doors	X
	10800	Restroom accessories		X
	16500	Décor window treatment	X
	06440	Lattice millwork	X
	06400	Vanity cabinets & counters		X
	09250	Customer line screen	X
	03000	Serving line concrete curb		X
	15780	Kitchen heat recovery unit	X
	03000	Floors:cooler/freezer/garbage rm		X
	13030	Garbage room		X
	09300	Kit. sanitary wall & floor tile		X
	15850	Kitchen air makeup unit	X
	15400	Kitchen drainage	X
	15412	Electric water coolers		X
	16510	Chandeliers, décor wall lights	X
	15400	Kitchen hot water heater	X
	16400	Primary elec. Dist. sys.	X	X
Munford	03000	Truck loading platform		X
	03000	Rail loading platform		X
	13030	Refrig. area (struct. elements)		X
Piggly Wiggly	15700	HVAC units	X
Publix	15700	HVAC system		X
Schrum	13122	Car wash facility		X
	15400	Plumbing system	X
	16200	Electrical system	X
Scott Paper	16400	Primary elec. Dist. Sys.	X	X
	16400	Secondary (general) elec.		X
Shoney’s	16510	Chandeliers	X
	16510	Hanging lanterns	X

TABLE BY CASE NAME

Case Name	Master Format Division	Asset Description	1245	1250
TI	03000	Waste treatment facilities	X
	09250	Drywall partitions		X
	13122	Misc. structures & related equip		X
	03000	Concrete floor & supp. columns	X
	03000	Concrete ground fl. & wood deck		X
	08970	Window walls		X
	09500	Ceilings		X
	15700	Air conditioning for tele. room	X
	15400	Plumbing servicing equip.	X
	08100	Emergency doors		X
	15300	Fire protection sys. – duct work	X
	15300	Fire protection system		X
	02825	Security fencing	X
	02930	Interior landscaping	X
	02930	Exterior landscaping		X
	16360	Cat. 1 – high voltage main		X
	16400	Cat. 2 – breaker/feeder sys		X
	16400	Cat. 3 – spare brkers, transf.		X
	16400	Cat. 4 – carries load to equip	X
Walgreen	09250	Partitions (drywall, glass)		X
	10800	Restroom partition(metal)		X
	06400	Millwork, metal work, trim		X
	08100	Doors		X
	09500	Ceilings (drywall, acoustical)		X
	09680	Floor coverings (carpet, tile)	X
	16500	Elec. light fixtures, wire, etc.		X
	10536	Décor: canopy, signs, concrete	X
Westroads	16220	Elec. power generating equip.	X
Whiteco	10426	Advertising signs (billboards)	X

TABLE OF CASES BY CSI

<td wi

CSI Master Format Division			Asset Description	Property Type:
Case Name				1245	1250
Division 02 – Sitework
Metro	02810	Sprinkler heads			X
TI	02825	Security fencing		X
La Petite	02825	Dumpster Encl. (fence & concrete)			X
La Petite	02825	Playground fence			X
Cons Freight	02825	Dock fence		X
TI	02930	Interior landscaping

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