Certificates of occupancy had been obtained before year end for two newly completed retail store buildings allowing them to receive equipment, shelving, racks, and merchandise, as well as the required installation personnel. However, the stores had not been issued certificates of occupancy allowing customers to enter the buildings.
The taxpayer argued that the properties were placed in service because they were ready and available for their intended use under Reg. 1.167(a)-11(e)(1) (e.g., to store and house equipment, racks, shelving, and merchandise). The IRS previously determined, because the two buildings were not open for business, they were not placed in service.
The district court, ruling for the taxpayer, determined the buildings were substantially complete, fully functional, and that placed in service does not require the business be “open for business” for purposes of a depreciation allowance.
Stine LLC , 115 AFTR 2d 2015-XXXX (DC LA). Case number 2:13-cv-03224.