Depreciation

[bertrandcpa]

A client bought a 60 foot  trailer to put on his lot as an additional office.  I would like to take Bonus Depreciation  on it but not sure if I can.  It is personal property as it mobile and not on a cement foundation but it is not easily moved and intent is to keep it on the property.  I tend to think it will not qualify for Bonus, but I think it is gray. 

[TaxGuyBill]

---

@bertrandcpa wrote:

It is personal property

---

If it is personal property, why do you think it would not qualify for Bonus?

[Carson man]

Thank your for your reply.  The reason why I do not think it qualifies is  that a mobile home used for a rental is considered residential real property (has a bathroom, sleeping facilities  and kitchen) though personal property  is depreciated over 27.5 years (Sec 168(c)). If  follows commercial rental that is permanently used  for an office and not easily moved  would be 39 year property.

If it is not easily moveable, it would be section 1250 property but easily moveable 1245. If it is permanently anchored in placed it is clearly 1250, but if not anchored but has plumbing electrical hard wired into it then does that make it 1250 property or not?  

[TaxGuyBill]

---

@Carson man wrote:

If it is permanently anchored in placed it is clearly 1250, but if not anchored but has plumbing electrical hard wired into it then does that make it 1250 property or not?  

---

In my opinion the plumbing (and maybe the electrical) anchors it, making it §1250 property, so it is no longer personal property.

If that is the case, it is depreciated over 39 years and not eligible for Bonus.

[TaxGuyBill]

Sorry, I hit the button too soon, I wasn't finished.

But it is not merely whether or not it is §1250 property or not.  Nonresidential Property is defined in §168 as:

The term “nonresidential real property” means section 1250 property which is not—

(i)

residential rental property, or

(ii)

property with a class life of less than 27.5 years.

So if it has a class life of less than 27.5 years, it would not be "Nonresidential Real Property".

You did call it a "trailer", which does have a class life of less than 27.5 years.  (See Revenue Procedure 87-56 and/or the listing in Publication 946).  Personally, I think the way you described the property it does not seem to be a "trailer" in the sense of those categories (seems to apply to the things that vehicles tow), but if you wanted to be aggressive, that would be your basis.

So I would still use 39 years and no Bonus, but if you think it really fits the category of a "trailer", you have that option.