depreciation of office furniture and fixtures - recoverable over five years?

Sec. 167(a)
Allowed as a depreciation deduction to provide a reasonable subsidy for the loss of property used in trade or business. Sec. 168(a)
Depreciation deductions under Sec are generally specified.
167 for any tangible property, the depreciation method applicable to the property, the period of recovery and the practice shall be used to determine. Sec. 168(a)
Specifies that the applicable recovery period for the modified accelerated cost recovery system property is \"5-
\"7 years of property\" and \"7 years of property\"year property.
\"Properties with a grade of more than four years but less than ten years are treated in five years --
Property with a life of 10 years or more but less than 16 years, according to Seven-year property (Sec. 168(e)(1)).
The \"Class life\" of a given asset is prescribed by the Ministry of Finance, \"reasonably reflecting the expected life of the class property to the industry or other groups \"(Sec. 167(m)).
The Ministry of Finance specified the class life of various assets in a series of income procedures, most recently Rev. Proc. 87-56.
Many taxpayers are particularly interested in the asset class for handling office furniture and fixtures: asset class 00.
11. Office furniture, fixtures and equipment, including furniture and fixtures for non-building structural components (
Such as desks, files, safes and communication equipment (
Other than other types of communication devices))
And asset category 57.
0 includes assets for wholesale and retail trade as well as distribution trade and services for personal and professional services.
Proper classification of various asset classes is important to determine the appropriate recovery period for a particular asset.
For example, this can be seen in the difference between asset class 00.
11. There are 10 years of class Life (
So one seven
Recovery in one year)
Asset Category 57.
There are nine years and five years of class life-
Recovery in one year).
So far, proper asset classification has become a problem, as evidenced by the number of cases that address this issue --e. g. , Walgreen Co.
& Subsidiary, 68 F3d 1006 (7th Cir. 1995)
Revg and rem \'G 103 TC 582 (1994); JFM, Inc.
& Subsidiary, TC Memo 1994-239;
ABC rentals for San Antonio, TC Memo 1994-
601, the appeal is on the record, Cir 10. , 5/16/95.
Recently addressed this issue in Norwest Corporation and subsidiary TC Memo 1995
390, in which the taxpayer argued that office furniture and fixtures put into use between 1987 and 1989 were properly classified as 57 types of assets.
00 instead of the asset category.
11 because these assets are used for distribution trade or services.
According to the Tax Court, furniture and fixtures (
Except for furniture and fixtures unique to taxpayer banking and financial services)
Fell under asset class 00.
Therefore, the recovery period is 7 years.
According to the court, Rev. Proc. 87-
56 divide assets into two categories :(1)
00 asset guide. 11-00.
4. Specific depreciable assets (
Such as furniture and fixtures)
Used in all business activities and (2)
Class 01 asset guide. 1-80.
0, consisting of depreciable assets for a specific activity.
According to the court\'s analysis, if an asset can fit into either of the two broad categories, it needs to be included separately in the first category.
Although the court said it \"reviewed the background of Class 57.
In Walgreens Company 0. . . . [and]JFM, Inc. . .
\"The court did not analyze these cases and did not analyze the applications for these cases.
Indeed, if the court had analyzed the cases within the scope of the issues before it, it would have determined that the cases required taxpayers to classify the furniture and fixtures as 57 categories. 0 assets.
In a previous decision by Walgreens
The court held that the subject real estate was not correctly classified into an industry category (i. e. Asset Category 57. 0)
Because a statutory provision specifically provides that real property cannot be included in any industry category unless it is expressly included.
From asset category 57.
0 does not include Sec.
1250 property, such property cannot be included in the asset category.
There is no such specific statutory exclusion in terms of office furniture and fixtures.
Wall Green the company
The case is also helpful because it clearly states that \"assets used in the provision of professional services, such as services provided by doctors, dentists, lawyers, [1]and]accountants. . .
Was included in level 57 assets.
0 lawyers and accountants in asset category 57.
0 is very convincing because the assets used in their business are not unique to their profession.
If the court\'s decision in nosey is correcte.
, Only assets that assign transactions or services \"unique\" can be classified as 57 categories.
0 assets, the impact of the court\'s judgment on lawyers, accountants and other professionals is not clear.
Does Norwest\'s opinion indicate that, contrary to the description of the asset class, there is no asset available to professionals that can be classified under Asset Class 57. 0?
If so, why is accounting and lawyers specifically mentioned in Asset Class 57. 0?
More importantly, JFM
The court concluded that when faced with assets that could be classified as Level 00 assets.
Asset Category 57. 0, that \"[i]
Class 57 T is clear. 0 and 57.
1 is intended to cover all possible types of real or personal property. . . whereas 00.
3 is a buzzword for the unclassified improvement of real estate. \" (Emphasis added. )
The court ruled that although these assets may have been included in the asset class 00. 3 (
Things like office furniture and fixtures can be classified as Level 00. 11 assets)
Assets are properly included in Category 57 assets. 0.
Because all the property used in that transaction or business belongs to asset class 57. 0.
While the nosi court concluded that the industry using a particular asset would not affect its life span, JFM, Inc.
The court ruled otherwise. The JFM, Inc.
The decision is based at least in part on the report submitted to the Tax Reform Act at the 1986 meeting, which contains the following guidance on the development of asset guidelines: any class life specified under the authority of the secretary must reflect the expected service life and the expected value decline over time, the assets of the industry or other groups.
Useful Life refers to the economic life of the property of all users, rather than the typical period in which the taxpayer holds the property, as previously prescribed by law. (Emphasis added. )
Norwest\'s decision was also inconsistent with Rev. Rul. 95-
52, which considers \"consumer durable property\" to be subject to rentto-
Asset Category 57 includes its own contract. 0 of Rev. Proc. 87-
56 and regarded as fiveyear property.
The term consumer durable property is defined in Rev. Proc. 95-
Furniture included.
Such furniture is \"generally used at home \"(emphasis added)
Therefore, furniture used in the Home Office is included. Since Rev. Rul. 95-
52 The use of furniture at home is not required to be considered \"consumer durable property\", furniture leased to the business based on rentto-
Asset Class 57 will also include its own contract. 0. Since Rev. Proc. 87-
56 The classification of property is not distinguished according to whether the property is owned or leased, and therefore, furniture used in any assigned trade or business is properly characterized as 57 categories. 0 asset.
Thus, it appears that the Northwest court overturned the established case law and administrative law, ignoring the intent of Congress to consider the general category (i. e.
, Asset category 00. 11)
Override a specific category (i. e.
Asset Category 57. 0)
, And all assets are treated the same, regardless of the industry in which they are used.