"D. Stussy" <spam[at]bde-arc.ampr.org> wrote in message
news:grg7mc$tn7$1[at]aux.snarked.org...
- quote -

How is this handled? Is the remaining amount on the depreciation schedule
left to run its course over the class life, or is the remaining amount
written off in the year of disposition? If the latter, what do you do on
the IRS forms? thanks.

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"Mark Bole" <makbo[at]pacbell.net> wrote in message
news:kYJCl.26029$YU2.19071[at]nlpi066.nbdc.sbc.com...
- quote -

Such is usually the case whenever an asset doesn't last as long as its
assigned IRS class life.

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"D. Stussy" <spam[at]bde-arc.ampr.org> wrote in message
news:gresu7$oqa$1[at]aux.snarked.org...
- quote -

better to do as some others have done here, and actually state what the case
SAID. What does "removing the roof" mean? Just apply the test stated in
the law and the case law. why paraphrase? All that causes is problems.

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Paul Thomas, CPA wrote:
- quote -

Can the basis include both the original and the replacement sewer line
at the same time? Seems to me there was a disposition of the original
sewer line, which may not have been fully depreciated.

-Mark Bole

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"Gil Faver" <rowdy'sboss[at]xxyz.com> wrote in message
news:iBuCl.531204$Mh5.357815[at]bgtnsc04-news.ops.worldnet.att.net...
- quote -

The decision didn't have to state that, but such is clearly implied.

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"D. Stussy" <spam[at]bde-arc.ampr.org> wrote
- quote -



If that is what was done, then it is a capital improvement.

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On Apr 6, 4:43*pm, "D. Stussy" <s...[at]bde-arc.ampr.org> wrote:
- quote -

Per Pub. 527:

"Repairs: A repair keeps your property in good operating condition. It
does not materially add to the value of your property or substantially
prolong its life

Improvements: An improvement adds to the value of property, prolongs
its useful life, or adapts it to new uses."

In this case:

Does replacing the sewer line add value? No, any buyer would expect
the property to have a working sewer line. Value would be reduced if
it wasn't working, but a working line (be it 1 year old or 20) will
not affect the value of the property.

Does it adapt it to new uses? Clearly not.

Does it keep the property in good operating condition? Clearly, yes.
It is restoring it to its former operating condition.

Does it prolong useful life? This one is iffy. A building can last 50
or 100 years or even more. (most of my rentals are over 100 years
old). They will last another 100 if maintained. Does a replaced sewer
line extend this life? I would argue no.

I would (and have) deduct this as a repair.

Now if he was adding a new sewer line to connect up to the sewer
system where there was no hookup before, that would be an improvement.

And btw, sometimes replacing is cheaper than repairing. This is almost
certainly true for a sewer line; it would be very difficult/expense to
gently unearth the one broken section of pipe, remove it, and put a
new section in. Much cheaper/faster to just blow the old one up and
drop in a replacement. I don't think "replacing" automatically makes
something an improvement.

Anyone know the status of proposed regs 1.162-4 and 1.263(a)-0 through
1.263(a)-3? These are supposed to definitively spell out when to
capitalize or when to deduct as a repair. I found a discussion on them
here: http://accountant.intuit.com/practic...capitalization

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Big Daddy wrote:
- quote -

Okay, you've seen other replies by now. So I'll add this based on
recent events with a client who also had to replace a sewer line.

If the replacement had been to normal deteriorating conditions and he
was advised to replace it sooner than later, it would have been a
capital item, and depreciable over 15 years.

However in this case, sewage was erupting and leaking everywhere, hence
it was a real emergency. Even though it cost a few thousand, it was
a hurried up repair, most essential to continued and uninterrupted use
of the business property.

So then we come to the crux of the matter and fall back on IRS dictum:
"Facts and circumstances."

ChEAr$,
Harlan Lunsford, EA n LA

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"D. Stussy" <spam[at]bde-arc.ampr.org> wrote in message
news:grdp90$l53$1[at]aux.snarked.org...
- quote -

from memory, I do not believe that court held:
"Removing the prior roof and putting a new one is a capital improvement."

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"Gil Faver" <rowdy'sboss[at]xxyz.com> wrote in message
news:7jpCl.104397$4m1.13031[at]bgtnsc05-news.ops.worldnet.att.net...
- quote -

Per the Tax Court decision (2002?): Paving over an existing roof without
removing it is a repair. Removing the prior roof and putting a new one is
a capital improvement.

Here, he removed and replaced the entire line, not a section, and not
patching it. It's a capital improvement.

--
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"Paul Thomas, CPA" <paulthomascpapc[at]bellsouth.net> wrote in message
news:GVoCl.25081$i9.4631[at]bignews7.bellsouth.net...
- quote -

But what is the asset? The awning (or sewer line) or the building as a
whole? Note our previous discussion (and court cases) on roofs.

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"Reggie" <Reggie[at]wantsnospam.com> wrote
- quote -



Anticipated life of the asset.

If I install an awning over the door of the business, it's new, includes the
frame, and would be a capital asset that gets depreciated. Next year I'm
replacing the fabric, which is almost an annual event given the weather
factors, so it's expensed.





--
Paul Thomas, CPA
Watkinsville, Georgia

--
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"Paul Thomas, CPA" <paulthomascpapc[at]bellsouth.net> wrote in message
news:ESlCl.25349$v8.13114[at]bignews5.bellsouth.net...
- quote -

and the other determining factors are?

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"Reggie" <Reggie[at]wantsnospam.com> wrote
- quote -



Replace and fix are different activities.

Replace means putting in an all new line. Fix means patching it up.

The scope of the project is one of the determining factors.





--
Paul Thomas, CPA
Watkinsville, Georgia

--
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"Arthur Kamlet" <kamlet[at]panix.com> wrote in message
news:grbmuo$nt9$2[at]reader1.panix.com...
- quote -

improvement? sounds like a repair.

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In article <69994ef5-474e-4ccc-878d-cebf8c3c9578[at]d38g2000prn.googlegroups.com> ,
Big Daddy <johngilmer[at]yahoo.com> wrote:
- quote -


Property improvements, land improvements, 15-year class life.
--

ArtKamlet at a o l dot c o m Columbus OH K2PZH

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Hello,

I paid a few thousand dollars to replace the sewer line in the
backyard of a rental property. Is this an expense just for this year,
or is it depreciable such that the expense is broken up over several
years? I've owned rentals for several years and have had some
expenses that are depreciable (e.g. when I replaced a furnace) and
some that aren't. Is there a guide that can explain to me in plain
English (not accounting technical language) what sort of expenses are
depreciable and how many years they should be depreciated over?

thanks in advance,

John

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