Works like this.........

(I'm just going to list a few comments, since I need to do a detailed review of this-----'cause what "tax gurus" have been telling me for years is apparently not dead on.........and I dont have time to do the research now.)

(Vast bulk of the following is coming from CCH.......so it is cited) 

For cash landlord

Tiling is deemed to be land improvement.

Land improvements are depreciable only if there can be proven to be of a character "subject to the allownace for derpeciation provided in Code Sec 167".

That puts asset into control of Section 1250..........property "...defined as any real property ..........subject to the allowance for depreciation provided in Code Sec 167"  (see above).

CCH-----"Thus, an inherently permanent structure that is not a building.........may be treated as 39-year real property if it has a class life equal to or greater than 27.5 years or has no class life."

So..........if tiling can be proven to depreciate (to any extent), then it comes within 1250, and can be depr as nonresidential real property.........recovery period 39 years.

I think plastic tiling can be easily shown to have a depr factor, especially since it is depr for situations like golf courses.

Therefore........I would be comfortable-------at this time-------to depr the tiling over 39 yrs as nonresidential real property.

Materially participating landlord

Section 1245(a)(3) rules, and makes the tiling 1245 property, and therefore that allows the 15yr life and 179 application.

BUT.........it does so by having regulation 1.1245-3 state that the other tangible property takes the meanings provided in reg 1.48-1.

Reg 1.48-1(d)(4) has a sentence in it which I had not.......apparently......given enough attention to in the past.  It is the last sentence in that para, and says "Property shall be considered used as an integral part of one of the specified activiites if so used either by the owner of the property or by the lessee of the property."

If that last sentence has the meaning which I think it might have, then that means that even the cash landlord could take tiling as 1245 property, because of the production activities of the tenant.

The problem-------this stuff has been around a long time, and I have not heard any guru discuss it------or I was sleeping at the time.

Result--------I will research this issue later, and see what some gurus say........but until then........I will still NOT deem the cash landlord to be able to depr the tiling.

Bluntly, I have not worried about it too much over the years, since the issue is usually sidestepped and accomplished in other means anyway, so the cash landlords were never "damaged" by such treatment.

And, I noted that I had indicated that ag fencing had to be part of the production deal------not so, it has a class life of its own, and therefore gets the stipulated 7 yr treatment.