Many years ago I was reading the instructions for an I.R.S. form regarding depreciation and came across an interesting phrase. The phrase was so silly and oddly specific that I remember it verbatim to this day. The phrase was, “If the property is [something, something, something] then the property is listed property unless it is a vine bearing nuts or a railroad tunnel on an Indian reservation.” For some unknown reason I was thinking about this today. Does this mean all vines bearing nuts are not listed property or does it mean only vines bearing nuts that are on an Indian reservation are not listed property? At the time I did not own any vines bearing nuts or railroad tunnels on or off any Indian reservation so I did not worry about it. Is this further evidence that I am losing my mind?
Some very specific requirements in the tax code are there so that a tax break only applies to one specific person. They can’t just name the person in the tax law, so they have to come up with a very specific combination of things that only that person has. Someone who’s donated a lot of money to their representative. This may be an example of that. I wish I could give an example, but don’t have one memorized.
So, a quick Google search on that phrase turned up the 1993 Instructions for Form 4562. I don’t think you actually remembered the phrase verbatim, but rather a mangled form of a couple of related passages.
Column (d ).- Determine the recovery period
from Table 1 below , unless either 1 or 2 below applies:
- You make an irrevocable election to use the 150% declining balance method of depreciation for 3-, 5-, 7-, or 10-year property (excluding any tree or vine bearing fruit or nuts). The election applies to all property within the classification for which it is made that was placed in service during the tax year. If you elect this method, you must use the recovery period under the Alternative Depreciation System (ADS) discussed in the line 15 instructions. You will not have an adjustment for alternative minimum tax purposes on the property for which you make this election.
- You acquired qualified Indian reservation property (as defined in section 168(j)(4)) that you placed in qualified service after 1993…
The Table 1 referred to above has a line item for “railroad gradings and tunnel bores.”
BTW, the current instruction for the form also mention trees and vines bearing fruit and nuts, property on Indian reservations, and railroad gradings and tunnel bores, but not in close proximity, and in phrases much more removed from your memory.
EDIT: I can’t figure out how to do a proper blockquote with the whole block I’m quoting in it. @#$! I think the above is clear enough, though.
Cecil did a column of the Gallo Wine Amendment: Does the “Gallo Law” exempt the winery from estate taxes? He doesn’t emphasize it but the amendment was written in such a way it would only apply to one individual.
Your Googled instructions are a sterling example why we pay someone to do our taxes.
One of our “luxuries” in life is a personal, trusted tax advisor.
No, Mr VOW and I are not wealthy. At times, we barely had two nickels to rub together. But we did own a couple of rentals, and our tax guy helped us survive that.
Never had to worry about nuts and berries (or pic-a-nic baskets!) or railroad tunnels or even Indian reservations… thank GAWD!
~VOW
I remember odd exceptions back in the day, mentioning railroads.
Were railroad workers somehow exempt from certain charges/taxes?
An early National Lampoon once published a needlessly complex application that had comments like “Do NOT mark any boxes on this page if your grandfather was in any way connected to the railroads”.
Yes, railroad employees were (I think still are?) exempt from Social Security taxes because they were covered by a separate Federally-administered pension system, the Railroad Retirement Program.
The 1993 instructions are definitely not the source of the quote but it probably was instructions for Form 4562 or a related form. I know it would have to be instructions for a 1998 form or later. I would have never had a reason to calculate depreciation for tax purposes before 1998. Before 1998, the only depreciation I would have calculated would have been for an accounting homework exercise. I specifically remember the quote because how can anyone but the I.R.S. be able to even imagine having the concepts of vines bearing nuts and railroad tunnels on Indian reservations together in the same sentence.
Ok, the 1999 instructions have the following passage:
For water utility property, residential rental property, nonresidential real property, any railroad grading or tunnel bore, or any tree or vine bearing fruit or nuts, the only applicable method is the straight line method.
Nothing in that line about Indian reservations, though.
I think I’m going to leave it at that, and not go through the last 20 years of instructions line by line. But, I’m pretty confident at this point that you’re simply not remembering the sentence correctly. There may have been at some point some version of the instructions for this form that had a sentence which included references to: trees and vines bearing fruit or nuts; railroad gradings or tunnel bores; and land on Indian reservations. But I’m pretty sure at this point that those have always been referenced as three separate items. So, there may well have been a sentence pretty close to your recollection, but I don’t think “railroad tunnels on an Indian reservation” was ever referenced.
gdave: I might be misremembering it slightly but I am not about to look through 20 years of I.R.S. instructions either. Maybe it was an I.R.S. informational booklet instead of instructions for a form. Anyway, it did specify “on an Indian reservation.” I appreciate and commend your skepticism. My grandmother once told me to never believe anything you hear and only half of what you see.
The built-in blockquote feature of the editor toolbar is not obvious. To use it correctly you need to start each paragraph within your blockquote with "> ", even blank paragraphs. That’s unintuitive and dumb.
IMO the easy way is to type this:
[quote]
[\quote]
on three separate lines as I have done. Then paste as many paragraphs, links, etc., as you want into the blank line in the middle. Whatever goes in between there will be a single blockquote. You can also nest blockquotes using the same technique if needed…
Also, you cannot type anything else on the lines that have the quote tags. Those each need to be on a line by themselves. Unlike the old board.
Easy once you know.
Maybe what I saw many years ago was a typographical error. If it had said, “… unless it is a tree or vine bearing fruit or nuts, or a railroad tunnel, or on an Indian reservation” then that would make sense in the context of determining if depreciable property was listed depreciable property. (If property is listed property then the recovery period for that property is specified by the tax code.) But that is not what I saw. What I saw said “or a railroad tunnel on an Indian reservation.” That struck me as ridiculously specific and absurd. And “a vine bearing nuts” made me try to think of any vine that bears nuts that would be grown commercially and need to be depreciated. I couldn’t think of any. The whole phrase was so crazy that I remember taking it to my other job later in the week just to show people an example of really stupid I.R.S. instructions. If the phrase were not so nonsensical I would never have given it a second thought and forgot about before the sun came up the next morning. If it was a typographical error in the late 1990’s or early 2000’s that was corrected later, would there be any way to find it on the Internet today?
Can anyone name a vine that bears nuts that would be grown in the United States? The peanut is technically not a nut but a legume but it is often called a nut. Although the peanut plant is a perennial, peanut plants grown for peanut production are harvested annually and would not need to be depreciated for tax purposes. And the peanut plant is not very vine-like.