6.4 Relevant Court Cases

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

  1. 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).
  2. 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).
  3. 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).
  4. Centr Citrus
    Central Citrus Co. v. Commissioner, 58 T.C. 365 (1972).
  5. Circle K
    Circle K Corp. v. Commissioner, T.C. Memo. 1982-298.
  6. 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).
  7. 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).
  8. Duaine
    Duaine v. Commissioner, T.C. Memo. 1985-39.
  9. Grinalds
    Grinalds v. Commissioner, T.C. Memo. 1993-66.
  10. 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.
  11. 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).
  12. King Radio
    King Radio Corp. v. United States, 486 F.2d 1091 (10th Cir. 1973), aff’g D.C. No. KC-3320).
  13. 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).
  14. LL Bean
    L.L. Bean, Inc. v. Commissioner, T.C. Memo. 1997-175, aff’d, 145 F.3d 53 (1st Cir. 1998).
  15. Mallinckrodt
    Mallinckrodt, Inc. v. Commissioner, T.C. Memo. 1984-532, aff’d, 778 F.2d 402 (8th Cir. 1985).
  16. McManus
    McManus v. United States, 700 F. Supp. 994 (W.D. Wis. 1987), aff’d, 863 F.2d 491 (7th Cir. 1988).
  17. Metro
    Metro Nat’l Corp. v. Commissioner, T.C. Memo. 1987-38.
  18. 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).
  19. Morrison
    Morrison, Inc. v. Commissioner, T.C. Memo. 1986-129, aff’d, 891 F.2d 857 (11th Cir. 1990).
  20. Munford
    Munford, Inc. v. Commissioner, 87 T.C. 463 (1986), aff’d, 849 F.2d 1398 (11th Cir. 1988).
  21. 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.
  22. Publix
    Publix Supermarkets, Inc. v. United States, 92-1 USTC ¶ 50,240 (Cl. Ct. 1992).
  23. 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).
  24. Scott Paper
    Scott Paper Co. v. Commissioner, 74 T.C. 137 (1980).
  25. Shoney’s
    Shoney’s South, Inc. v. Commissioner, T.C. Memo. 1984-413, action on dec., 1986-048 (September 19, 1986).
  26. TI
    Texas Instruments Inc. v. Commissioner, T.C. Memo. 1992-306.
  27. 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.
  28. Westroads
    Westroads, Inc. v. Commissioner, 69 T.C. 682 (1978), acq., 1979-2 C.B. 2.
  29. Whiteco
    Whiteco Industries, Inc. v. Commissioner, 65 T.C. 664 (1975), acq., 1980-2 C.B. 2.

TABLE BY CASE NAME

Case NameMaster Format DivisionAsset Description12451250
AC Monk15700Louvered Wall to BoilerX
03000Truck ApronX
10800Lavatory FurnishingsX
15300Fire Hose StationsX
13120Special RoomsX
13120Storage ShedsX
16400Elec. Dist. to lights & machinesX
03000Concrete RR dockX
13030Green storage roomX
Albertson’s15700HVAC systemX
05100Raised roofX
Bod-Nol09500Suspended CeilingsX
06170Ext. Mansard-Marlite roof panelsX
16400Electrical to equipmentX
15400Plumbing to equipmentX
15700Kitchen HVACX
08830Decorative MirrorX
08582Carousel drive-up window unitX
Centr Citrus15700BlowersX
15700CoolersX
16400Elec. dead front panelX
16300Elec. Transformer to facilitiesX
16400Elec. Gutter plus ends & cuttingX
16400Elec. Dist: adapters/relays/fuseX
1614030 amp. SwitchX
16300Elec. Transformer for sweet rmX
16140Elec. OutletsXX
16510Fluorescent fixturesXX
16510Spotlight and flood lampsXX
16510Moisture-proof lampsX
16300Elec. Transformer for damperX
16510Ballast lightsX
Circle K13030Cold storage rm.X
15700Air conditioning units (roof)X
Cons Freight03000Raised concrete loading dockX
08330Overhead doorsX
16510Light fixtures – mercury vaporX
02825Dock fenceX
 

Dixie Man

15700Air conditioning/Heating (roof)X
09250Rm partition (drywall/wood stud)X
Duaine03100Concrete slab behind counterX
09300Floor tileX
09300Wall tileX
15100Water lines to cooking table,etcX
15100Gas lines to cooking elementsX
15100Connecting fixtures to applianceX
15100Copper drain lines from refrig.X
16510Ornamental light fixturesX
16140Elec. Outlets to equip.X
Grinalds15700Air conditioning unitsX
09250Partitions (cubical type)X
09250Walls (interior)X
10800Walls (restroom)X
15400Plumbing – restroomX
16200Elec. Conduit & Recep. – RestrmX
HCA16300Primary & secondary elec. dist.XX
16400Branch elec. dist.XX
16200Branch elec. – TV equip.X
16700Telephone wiring, jacksX
16200Elec. Wiring – inter-com equip.X
09680CarpetingX
09720Vinyl wall coveringX
09600Vinyl wall coveringX
15400Kitchen water pipe, grease trapX
15400Plumbing for x-rayX
15850Kitchen hood & exhaust sys.X
05720Patient corridor handrailsX
16510Over-bed recessed lightsX
10650Accordion doors/partitionsX
10800Bathroom acces., plastic mirrorsX
09510Acoustical ceiling tileX
15510Steam boilers & acces.X
Ill Cereal16400Elec. Distribution system (95%)X
King Radio10630Partitions (ceiling height)X
10630Glazed partitionsX
10630Movable partition sys.X
LL Bean13140Storage rack sys. (supp. roof)X
03000Super-flat concrete slabX
13140Roofing & wall panelsX
16400Electrical systemX
15300Sprinkler systemX
15764Heating/ventilation systemX
13138Mezzanine systemX
La Petite09250Wall panels-porc.enamel/gyp.bd)X
06170Mansard roofX
02825Playground fenceX
16520Exterior façade lighting sys.X
15300Fire protection sys.X
15300Heat & smoke detectorsX
16530Emergency lightsX
10426Illum. Exterior signsX
10800Child’s restrm./handicap cabinetX
11442Grease trap to counterX
16200Elec. Service to counterX
02825Dumpster encl: fence & concreteX
15780Thermal recov. Sys.–water heaterX
08300Doors(kitchen, by-pass, Dutch)X
Mallinckrodt09250Partitions (gyp. drywall)X
McManus13120Ten unit hangar bldg.X
08344Hangar doorsX
08970Glass/door storefront partitionsX
10800Toilet partitionsX
09510False ceilings & gridsX
16510Lay-in lighting facilitiesX
16520Exterior security lightingX
16510Grow lightsX
16510Accent decor lighting (exterior)X
06400Cabinets (plastics & hardware)X
02810Sprinkler headsX
 

Minot Fed

10630Pre-manuf. Wall partitionsX
08100Door units (in partitions)X
Morrison16530Emergency lightingX
16440Kitchen panel boardsX
15400Kitchen hand sinksX
15400Kitchen water pipingX
08380Eliason doorsX
10800Restroom accessoriesX
16500Décor window treatmentX
06440Lattice millworkX
06400Vanity cabinets & countersX
09250Customer line screenX
03000Serving line concrete curbX
15780Kitchen heat recovery unitX
03000Floors:cooler/freezer/garbage rmX
13030Garbage roomX
09300Kit. sanitary wall & floor tileX
15850Kitchen air makeup unitX
15400Kitchen drainageX
15412Electric water coolersX
16510Chandeliers, décor wall lightsX
15400Kitchen hot water heaterX
16400Primary elec. Dist. sys.XX
Munford03000Truck loading platformX
03000Rail loading platformX
13030Refrig. area (struct. elements)X
Piggly Wiggly15700HVAC unitsX
Publix15700HVAC systemX
Schrum13122Car wash facilityX
15400Plumbing systemX
16200Electrical systemX
Scott Paper16400Primary elec. Dist. Sys.XX
16400Secondary (general) elec.X
Shoney’s16510ChandeliersX
16510Hanging lanternsX

TABLE BY CASE NAME

 

 

Case Name

Master Format DivisionAsset Description12451250
TI03000Waste treatment facilitiesX
09250Drywall partitionsX
13122Misc. structures & related equipX
03000Concrete floor & supp. columnsX
03000Concrete ground fl. & wood deckX
08970Window wallsX
09500CeilingsX
15700Air conditioning for tele. roomX
15400Plumbing servicing equip.X
08100Emergency doorsX
15300Fire protection sys. – duct workX
15300Fire protection systemX
02825Security fencingX
02930Interior landscapingX
02930Exterior landscapingX
16360Cat. 1 – high voltage mainX
16400Cat. 2 – breaker/feeder sysX
16400Cat. 3 – spare brkers, transf.X
16400Cat. 4 – carries load to equipX
Walgreen09250Partitions (drywall, glass)X
10800Restroom partition(metal)X
06400Millwork, metal work, trimX
08100DoorsX
09500Ceilings (drywall, acoustical)X
09680Floor coverings (carpet, tile)X
16500Elec. light fixtures, wire, etc.X
10536Décor: canopy, signs, concreteX
Westroads16220Elec. power generating equip.X
Whiteco10426Advertising signs (billboards)X

TABLE OF CASES BY CSI

 

CSI Master Format DivisionAsset DescriptionProperty Type:
Case Name12451250
Division 02 – Sitework
Metro02810Sprinkler headsX
TI02825Security fencingX
La Petite02825Dumpster Encl. (fence & concrete)X
La Petite02825Playground fenceX
Cons Freight02825Dock fenceX
TI02930Interior landscapingX
TI02930Exterior landscapingX
Division 03 – Concrete
TI03000Concrete floor & supp. columnsX
TI03000Concrete ground fl. & wood deckX
AC Monk03000Concrete RR dockX
AC Monk03000Truck apronX
Morrison03000Floors: cooler/freezer/garbage rmX
Cons Freight03000Raised concrete loading dockX
Morrison03000Serving line concrete curbX
LL Bean03000Super-flat concrete slabX
Munford03000Truck loading platformX
TI03000Waste treatment facilitiesX
Munford03000Rail loading platformX
Duaine03100Concrete slab behind counterX
Division 04 – Masonry
Division 05 – Metals
AC Monk05100Raised roofX
McManus05300Metal partitionsX
HCA05720Patient corridor handrailsX
Division 06 – Wood & Plastics
Bod-Nol06170Exterior Mansard-Marlite roof panelsX
La Petite06170Mansard RoofX
Metro06400Cabinets (plastics & hardware)X
Walgreen06400Millwork, metal work, trimX
Morrison06400Vanity cabinets & countersX
Morrison06440Lattice millworkX
Division 08 – Doors & Windows
TI08100Emergency Doorsx
Walgreen08100DoorsX
Centr Citrus08100Sweet room doorsX
 

Minot Fed

08100Door units (in partitions)X
La Petite08300Doors (kitchen, bypass and Dutch)X
Cons Freight08330Overhead doorsX
McManus08344Hangar doorsX
Morrison08380Eliason doorsX
Bod-Nol08582Carousel drive-up window unitX
Bod-Nol08830Decorative mirrorX
TI08970Window wallsX
Metro08970Glass/door storefront partitionsXX
Division 09 – Finishes
La Petite09250Wall panels (porc. enameled/gyp.bd)X
Morrison09250Customer line screenX
TI09250Drywall partitionsX
Mallinckrodt09250Partitions (gyp. drywall)X
Metro09250Partitions (gyp. drywall)X
Walgreen09250Partitions (drywall, glass)X
Grinalds09250Partitions (cubical type)X
 

Dixie Man

09250Rm. Partitions (drywall/wood stud)X
Grinalds09250Walls (interior)X
Duaine09300Floor TileX
Morrison09300Kitchen sanitary wall & floor tileX
Duaine09300Wall TileX
TI09500CeilingsX
Walgreen09500Ceilings (drywall & acoustical)X
Bod-Nol09500Suspended CeilingsX
HCA09510Acoustical ceiling tileX
Metro09510False ceilings and gridsX
Walgreen09680Floor coverings (carpet, tile)X
HCA09680CarpetingX
HCA09720Vinyl Wall CoveringX
Division 10 – Specialties
Whiteco10426Advertising signs (billboards)X
La Petite10426Illum. Exterior SignsX
Walgreen10536Décor: canopy, signs, concreteX
King Radio10630Glazed partitionsX
King Radio10630Movable Partition SystemX
King Radio10630Partitions (ceiling height)X
 

Minot Fed

10630Pre-Manufactured Wall PartitionsX
HCA10650Accordion doors/partitionsX
AC Monk10800Lavatory FurnishingsX
HCA10800Bathroom acces., plastic mirrorsX
Walgreen10800Restroom partition (metal)X
Morrison10800Restroom accessoriesX
Metro10800Toilet partitionsX
La Petite10800Child’s Restroom/Handicap CabinetX
Grinalds10800Walls (restroom)X
Division 11 – Equipment
La Petite11442Grease trap to counterX
Division 12 – Furnishings
Division 13 – Special Construction
Morrison13030Garbage roomX
AC Monk13030Green storage roomX
Circle K13030Cold storage roomX
Munford13030Refrig. Area (structural elements)X
AC Monk13120Special roomsX
AC Monk13120Storage shedsX
McManus13120Ten unit hangar bldg.X
TI13122Misc. structures & related equip.X
Schrum13122Car wash facilityX
LL Bean13138Mezzanine systemX
LL Bean13140Storage rack system (supp. roof)X
LL Bean13140Roofing and wall panelsX
Division 15 – Mechanical
Plumbing – Pipes and Fittings
Duaine15100Connecting fixtures to applianceX
Duaine15100Copper drain lines from refrigeratorX
Duaine15100Gas lines from refrigeratorX
Duaine15100Water lines to cooking table, etc.X
Fire Protection Systems
AC Monk15300Fire hose stationsX
La Petite15300Heat and smoke detectorsX
TI15300Fire protection systemX
TI15300Fire protection system – duct workX
LL Bean15300Sprinkler systemX
La Petite15300Fire protection systemX
Plumbing – Fixtures
TI15400Plumbing servicing equip.X
Morrison15400Kitchen drainageX
Morrison15400Kitchen hand sinksX
Morrison15400Kitchen hot water heaterX
Morrison15400Kitchen water pipingX
HCA15400Kitchen water pipe, grease trapX
Bod-Nol15400Plumbing to equip.X
HCA15400Plumbing to x-rayX
Grinalds15400Plumbing – restroomX
Schrum15400Plumbing systemX
Morrison15412Electric water coolersX
HVAC
HCA15510Steam boilers & acces.X
AC Monk15700Louvered wall to boilerX
TI15700Air conditioning for telephone roomX
 

Dixie Man

15700Air conditioning/heating (roof)X
Centr Citrus15700BlowersX
Centr Citrus15700CoolersX
Grinalds15700Air conditioning unitsX
Piggly Wiggly15700HVAC unitsX
Albertson’s15700HVAC systemX
Publix15700HVAC system`X
Circle K15700Air conditioning units (roof)X
Bod-Nol15700Kitchen HVACX
LL Bean15764Heating/ventilation systemX
Morrison15780Kitchen heat recovery unitX
La Petite15780Thermal recovery system – water heaterX
Morrison15850Kitchen air makeup unitX
HCA15850Kitchen hood & exhaust systemX
Division 16 – Electrical
Wire, Conduit, J-boxes to End Use Fixture
Centr Citrus1614030-amp. SwitchX
Duaine16140Electrical outlets to equip.X
Centr Citrus16140Elec. OutletsXX
Grinalds16200Elec. Conduit & recep. – restroomX
HCA16200Elec. Wiring – inter-com equipX
HCA16200Branch elec. – TV equipX
La Petite16200Electrical service to counterX
Schrum16200Electrical systemX
Generating Equipment
Westroads16220Electrical power generating equip.X
Power Transmission
Centr Citrus16300Elec. Transformer to facilitiesX
Centr Citrus16300Elec. Transformer for dumpsterX
Centr Citrus16300Elec. Transformer for Sweet roomsX
TI16360Category 1 – high voltage (main)X
Service and Distribution
HCA16400Primary & secondary elec. Distrib.XX
HCA16400Branch elec. dist. SystemXX
TI16400Category 2 – breaker/feeder systemX
TI16400Category 3 – spare breakers & transformersX
TI16400Category 4 – carries load to equip.X
Scott Paper16400Primary electrical distribution systemXX
Scott Paper16400Secondary (general) electrical servicesX
Bod-Nol16400Electrical to equip.X
Ill Cereal16400Electrical distribution system (95%)X
AC Monk16400Elec. dist. to lights & machinesX
LL Bean16400Electrical systemX
Centr Citrus16400Elec. – dead front panelX
Centr Citrus16400Elec. dist: adaptors, relays, fuses, switchesX
Centr Citrus16400Elec. gutter plus ends & cuttingsX
Morrison16400Primary electrical dist. SystemXX
Morrison16400Kitchen panel boardsX
Lighting
Morrison16500Décor window treatmentX
Walgreen16500Elec. light fixtures, wire, etc.X
Metro16510Accent decorative lighting (exterior)X
Centr Citrus16510Ballast lightsX
Shoney’s16510ChandeliersX
Morrison16510Chandeliers, décor wall lightsX
Centr Citrus16510Fluorescent fixturesXX
Metro16510Grow lightsX
Shoney’s16510Hanging lanternsX
Metro16510Lay-in lightingX
Cons Freight16510Light fixtures – mercury vaporX
Centr Citrus16510Moisture-proof lampsX
Duaine16510Ornamental light fixturesX
HCA16510Over-bed recessed lightsX
Centr Citrus16510Spotlight & flood lampXX
La Petite16520Exterior façade lighting systemX
Metro16520Exterior security lightingX
Morrison16530Emergency lightingX
La Petite16530Emergency lightingX
Communications
HCA16700Telephone wiring, conduit jacks, etc.X