Treasury Regulations for Depreciable Property
A guide to the Treasury regulations cost segregation relies on most: §1.48-1 definitions of personal property and structural components, class-life and placed-in-service rules, general asset accounts, dispositions, and bonus depreciation. Local fixture law is not controlling. Educational information, not tax advice.
Educational information, not tax advice.
Updated 2026-10-14
Key takeaways
- §1.48-1 defines tangible personal property, buildings, and structural components. Local fixture law is not controlling.
- §1.167(a)-11 includes the placed-in-service concept used with Publication 946.
- §1.168(i)-8 governs dispositions, including the partial disposition election.
- §1.168(k)-2 is the bonus depreciation regulation, applied to post-January 19, 2025 property through Notice 2026-11.
- Pre-1987 investment-credit regulations are used by analogy; their current-law role is interpretive.
Treasury Regulation §1.48-1 was written for the former investment tax credit, but its definitions remain central to cost segregation. It defines tangible personal property as tangible property other than land and improvements such as buildings and other inherently permanent structures, including structural components. Local law is not controlling. Property can be personal property for these purposes even if local law treats it as a fixture.
The regulation lists examples of property contained in or attached to a building that can be tangible personal property: production machinery, printing presses, office equipment, refrigerators, grocery counters, testing equipment, display racks and shelves, and signs. Machinery in the nature of machinery remains personal property even if located outside a building, such as a gasoline pump or hydraulic car lift. Buildings, swimming pools, paved parking areas, wharves, docks, bridges, and fences are not tangible personal property.
Structural components include walls, partitions, floors, ceilings and permanent coverings, windows and doors, all components of a central air-conditioning or heating system, plumbing and plumbing fixtures, electric wiring and lighting fixtures, chimneys, stairs, escalators, elevators, sprinkler systems, fire escapes, and other components relating to the operation or maintenance of a building. There is an exception for machinery whose sole justification is meeting temperature or humidity requirements essential for operating other machinery or processing materials or foodstuffs. That exception is how certain dedicated process cooling can be personal property.
In Hospital Corporation of America v. Commissioner (1997), the Tax Court held that these investment-credit definitions still determine §1245 versus §1250 status under MACRS. Rev. Proc. 87-56 class 00.3 also refers to §1.48-1(e) to exclude buildings and structural components from land improvements. The current-law role of §1.48-1 is interpretive. It is not a live investment-credit computation.
This page is educational information, not tax advice. This summary does not cover every depreciation regulation. Sections 1.167(a)-1 through -10 and the investment-credit placed-in-service rules in §1.46-3 were not reviewed for this page.
Buildings and closely related structures
A building is generally a structure or edifice enclosing a space within its walls, usually covered by a roof, whose purpose is shelter, housing, or working, office, parking, display, or sales space. Apartment houses, factories, offices, warehouses, barns, garages, stations, and stores are examples. A structure built by a lessee is still a building even if it must be removed at the end of the lease.
The term does not include a structure that is essentially an item of machinery or equipment, or a structure so closely related to the property it houses that it can be expected to be replaced when that property is replaced. Oil and gas tanks, grain bins, silos, fractionating towers, blast furnaces, and similar process structures are the regulation’s examples of what is not a building.
Those process-structure examples are not a license to treat every factory shell as equipment. Most manufacturing buildings remain buildings. Dedicated process structures are a narrower category.
Other key regulations
§1.167(a)-11 addresses depreciation based on class lives, including the placed-in-service concept and the rule that a lessor generally uses the activity class of the lessee’s use. Publication 946 uses the same readiness-and-availability idea. The regulation cross-references §1.46-3(d) for the placed-in-service date; that cross-referenced text was not fetched for this page.
§1.168(i)-1 allows general asset accounts for GDS or ADS assets if an election is made. Mixed personal and business-use assets are excluded. Dispositions from a general asset account follow that regulation, not the default §1.168(i)-8 rules, except as provided.
§1.168(i)-8 governs dispositions of MACRS property, including the partial disposition election. §1.168(k)-2, issued in T.D. 9874 (2019) and amended by T.D. 9916 (2020), is the bonus-depreciation regulation. Notice 2026-11 tells taxpayers to apply it to post-January 19, 2025 property with the new dates substituted.
How the definitions apply today
Cost segregation still starts from these definitions. An item is not personal property merely because it can be unscrewed. Permanence, function, and whether the item relates to operation or maintenance of the building are the questions the regulation and later cases ask.
The IRS Cost Segregation Audit Techniques Guide uses the same framework. The ATG is not law. Item results in Hospital Corporation of America are fact-specific. Action on Decision 1999-008 accepted the legal test and left room to dispute particular items.
Whiteco’s inherent-permanence factors are often applied alongside §1.48-1. They are a Tax Court test, not a statute. This page does not restate those six questions as a checklist that always produces personal property.
What we have not reviewed
This summary does not cover every depreciation regulation. Sections 1.167(a)-1 through -10 and the investment-credit placed-in-service rules in §1.46-3 were not reviewed for this page.
eCFR fetches can return a CAPTCHA interstitial. The §1.48-1 text used here was opened on LII’s CFR mirror. If a later amendment is posted only on eCFR, re-open that text before treating a fine point as re-verified.
Proposed regulations under §168(k) (RIN 1545-BR95) had not been published as of October 16, 2026. Until they are, Notice 2026-11 is the bridge from §1.168(k)-2 to the 2025 statute.
Sources
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