Structural Components Decisions
Courts treat walls, floors, ceilings, and systems that serve the building as structural components, generally recovered with the building. HCA applied that definition under MACRS. AmeriSouth shows how often apartment components stay there.
Educational information, not tax advice.
Updated 2026-10-14
Key takeaways
- Treas. Reg. §1.48-1(e)(2) lists walls, floors, ceilings, windows, central HVAC, plumbing, wiring, stairs, elevators, and sprinklers as structural components.
- HCA held those ITC definitions still matter under MACRS. The IRS agreed with the test, not with HCA’s item results.
- AmeriSouth kept most of a 1,000-item apartment study with the 27.5-year buildings. An item is not personal property merely because a study names it separately.
- Educational information, not tax advice.
Structural components are parts of a building that relate to its operation or maintenance. Treas. Reg. §1.48-1(e)(2) gives the working list: walls, partitions, floors, ceilings, windows, doors, plumbing, wiring and lighting fixtures, chimneys, stairs, escalators, elevators, sprinkling systems, fire escapes, and other components relating to the operation or maintenance of the building. Permanent coverings such as paneling or tiling are on that list too.
Hospital Corporation of America & Subsidiaries v. Commissioner, 109 T.C. 21 (1997), held that those definitions still decide §1245 versus §1250 classification under ACRS and MACRS. The statutory ban on component depreciation does not turn every attached hospital item into part of the building. Action on Decision 1999-008 accepted that legal test and refused to treat HCA’s item-by-item results as a rule. Examiners may still win on the facts.
AmeriSouth XXXII, Ltd. v. Commissioner, T.C. Memo. 2012-67, is the modern caution. A partnership bought the Garden House apartments in Mesquite, Texas, for $10.25 million and commissioned a study that mentally took the property apart into more than 1,000 components across twelve categories, including site utilities, “special” HVAC, plumbing, and electric, finish carpentry, millwork, interior windows, mirrors, and special painting. The Tax Court kept most of those items with the 27.5-year buildings. Cabinets, countertops, molding, chair rails, mirrors, and general outlets failed because the taxpayer did not prove unusual circumstances or non-permanence. A small set survived: dryer vents, gate components, irrigation outlets and timers, surveillance equipment, appliance outlets, and cable, phone, and data outlets.
Metro National Corp. v. Commissioner, T.C. Memo. 1987-38, shows the same list producing opposite results in one office-and-medical project. Movable gypsum partitions and corridor storefronts were personal property; atrium storefront walls, lay-in ceilings, restroom partitions (per the audit guide table), and lawn sprinkler heads were not. Boddie-Noell Enterprises, Inc. v. United States, 36 Fed. Cl. 722 (1996), read the regulation list strictly for Hardee’s units and also rejected the cost estimates used to pull HVAC, electrical, plumbing, and ceiling pieces out of the buildings. The audit guide treats Boddie-Noell as limited to its forum.
A proposed Super Intelligence workflow would organize inspection notes against this regulation and these cases. It is not described here as an operational classifier, and it would not make an item 5-year property by naming it. This page is educational information, not tax advice.
The machinery exception
The regulation has a “sole justification” exception for machinery whose only justification is meeting temperature or humidity requirements essential for other machinery or for processing materials or foodstuffs. Kitchen or process HVAC sometimes fits that sentence. Ordinary tenant-comfort HVAC generally does not. The audit guide warns against allocating a single HVAC unit between the two.
Building type matters
AmeriSouth evaluated components against garden apartments, not against a hospital or a mill. Flag F-11 is the reason residential pages should not import HCA hospital results as if they were apartment results. The legal test is the same. The facts are not.
How to read a loss
A structural-component holding is a holding about those facts. It does not mean cost segregation is invalid. It means the taxpayer did not prove that the named item was something other than part of the building’s operation or maintenance.
How to use this page
Read HCA for the legal test that ITC definitions still apply under MACRS. Read AmeriSouth for what happens when a residential study names more than a thousand components without proving unusual circumstances. Read Metro for an office-and-medical record in which two partitions, two lighting packages, and two “storefronts” did not receive the same label. Read Boddie-Noell for a restaurant record that both enforced the regulation list and rejected the numbers used to pull systems apart.
Then return to the building in front of you. A hospital vinyl covering, an apartment chair rail, and a cafeteria sanitary tile can all be “interior finish” in conversation and still sit in different places on the regulation’s list. Flag F-10 is the drafting rule: present each outcome as fact-specific. Flag F-11 is the residential rule: AmeriSouth judged components against garden apartments, not against HCA’s hospitals.
This library does not give AmeriSouth its own named URL (flag F-21). The opinion was opened and is discussed here because it is the leading modern structural-component caution. Educational information, not tax advice.
Limits and flags
This page is a map of structural-component authorities, not a holding that any listed item is always 39-year or 27.5-year property. HCA’s hospital vinyl and AmeriSouth’s apartment chair rails can both be “interior finish” in conversation and still sit in different places on Treas. Reg. §1.48-1(e)(2). The IRS acquiesced in HCA’s legal test and refused to treat HCA’s item results as a rule (AOD 1999-008).
Boddie-Noell is forum-limited per the audit guide. Metro is a memorandum opinion summarized from FSA 200203009 and the audit guide table; the memorandum text itself was not at the inventory URL. Illinois Cereal, Duaine, and Consolidated Freightways appear only as secondary table citations and are not quoted as opened opinions.
Publication status, sitemap, robots, and REQUIRE_EXPERT_REVIEW were not changed. No page is marked expert-reviewed. Super Intelligence is proposed only. Educational information, not tax advice.
Sources
- 1
- 2
- 3
- 4
- 5
- 6Metro National Corp. v. Commissioner, T.C. Memo. 1987-38(opens in a new tab)
IRS written determination that summarizes the decision.
- 7IRS Publication 5653 — Cost Segregation Audit Techniques Guide (rev. 2-2025)(opens in a new tab)
Written for IRS examiners. The guide states it is not an official pronouncement of law and cannot be cited as authority. It predates the July 2025 law.