Where an asset is classified as a land improvement
rather than as depreciable real property, the difference in depreciation expense in each of the early years of such asset's life can be significant.
[Z.sub.i] = the value on discriminant variable [X.sub.i] for case m in group k; ([X.sub.1] = age of household head, [X.sub.2] = level of education, [X.sub.3] = tenure rights, [X.sub.4] = farm size, [X.sub.5] = household size, [X.sub.6] = use of land improvement
techniques, [X.sub.7] = cropping pattern, [X.sub.8] = membership of association, and [X.sub.9] = access to extension service), and = coefficients which produce the desired characteristics in the function.
include costs for items such as parking lots, landscaping, sidewalks, curbs and gutters.
As noted, when an investor purchases a parcel of improved real estate, he or she purchases a "package" consisting of land, building, land improvements
, and personal property.
* Because cost-segregation studies often misclassify or overlook land improvements
, taxpayers should keep documentation identifying and segregating depreciable land improvements
While the court in Munford was not concerned with this question, it is reasonable to conclude that the addition would be considered a land improvement
, reducing the depreciable life of the addition from 39 years to 15.
Industry standards can then provide the historic cost of this land improvement
The court further concluded that because the company's primary business activity was the transportation of natural gas (not gas processing), its assets belong either in asset class 46.0 or asset class 00.3 (land improvement
); "the most important issue in resolving this dispute is determining for what the system operator is paid.