Is my sign a business asset that I can capitalize or expense?

The following article originally appeared on the Small Business Administration website in February 2001, but it was subsequently removed.

In the late 1960s, the Internal Revenue Service determined that on-premise signs represent an accessory, real-property interest, and therefore, if you own your sign, you may depreciate it over a period of years. If you lease your sign, the lease payments may be expensed. Any costs associated with maintaining or repairing the sign also may be expensed.

(See, IRC, section 168: Recovery Periods (in years). …57.0 Distributive Trades and Services: Includes assets used in wholesale and retail trade, and in personal and professional services. Includes section 1245 assets used in marketing petroleum and petroleum products. Class life in years: 9; General depreciation system: 5.

Personal (section 1245) subject to more favorable depreciation treatment under MACRS signs.

Depreciable Property. Signs with a useful life of more than one year are depreciable. It was so held with respect to advertising signs, in Alabama Coca-Cola Bottling Co. (1969) TC Memo 1969, PH TCM, section 69123, 28 CCU TCM 625.)

 

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Posted in Amoritzation, Sign Questions Answered, Small Business Administration.