One of the topics we receive considerable inquiries relates to
conveying systems in auto dealerships and other commercial businesses.
Conveying systems consist of equipment that move materials or people and
include passenger conveying systems, parts lifts, freight elevators,
vehicle lifts and material hoists. The function of each conveying system
determines its useful, depreciable life.
Passenger conveyor systems such as elevators, escalators, and moving
sidewalks are used to transport passengers in horizontal, vertical or
inclined directions. These systems and their associated components
including handrails and smoke baffles, for example, are designed to
remain in place and are considered 39-year real property since they
relate to the normal operation of the building.
Parts lifts, belt conveyors, roller conveyors, etc. are used to move
supplies or materials, typically to a storage room or mezzanine located
on another level. These are similar to elevators except they are usually
not equipped to move people and may lack some of the safety equipment
found on elevators. Most parts lifts/conveyors are self-supported,
requiring no structural modification to the building. Because the
primary function of these lifts is moving inventory and other materials
used in the business they are typically classified as personal 5-year
property.
Freight elevators are designed to carry goods rather than passengers;
however, since they are designed to carry passengers as well as
materials, they have been associated with elevators and have a useful,
depreciable life of 39-years. Freight elevator designs are more durable
and less aesthetic and they vary from parts lifts because they travel
faster, travel to greater heights, have greater capacities and have
automatic operation. Of particular note are the elevators that move
automobiles in multi-story dealerships and parking garages. These items
have typically been considered to be similar to passenger elevators and
assigned a 39-year life despite the fact they serve a unique function
related to product handling.
Vehicle lifts and hoists are considered to be tools/equipment in
maneuvering automobiles or their components into maintenance positions
and are treated as personal property with a 5-year depreciable life.
Cranes, overhead hoists and trolley beams will be discussed in a future
newsletter because of their unique applications.
Finally, mechanical, electrical and instrumentation utilities
supporting the conveying equipment deemed to be personal property should
likewise be depreciated as 5-year personal property. Mr. Archer is a
Civil Engineer with a Masters degree in Business Administration and a
Masters Degree in Engineering Management. He is an Adjunct Professor of
Engineering Management at the University of Louisville and is the
President of his own engineering company, Lindon Engineering Services,
Inc
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