Depreciation of greens and tees.

• Author: Bakale, Anthony
• Position: Golf courses

According to Rev. Rul. 2001-60, land preparation costs in the original construction or reconstruction of golf course greens and tees may be subject to depreciation under Sec. 167.

Facts

Two types of golf course greens currently in use are push-up (or natural-soil) greens and modern greens. Push-up or natural-soil greens are essentially landscaping that involves some land reshaping or regrading. The soil is pushed up or reshaped to form the green. While push-up or natural-soil greens may have limited irrigation systems (such as hoses and sprinklers adjacent to the greens), they do not have subsurface drainage systems.

Modern greens make use of technological changes in green design and construction and contain sophisticated integrated drainage systems. The construction of a modern green occurs after the general earthmoving, grading and initial shaping of the area surrounding and underneath the green. These greens are constructed with a network of subsurface drainage tiles or interconnected pipes, one or more layers of gravel or sand particles or both, a rootzone layer and a variety of turfgrass. Over time, the modern green loses its effectiveness as a drainage system due to tile or pipe deterioration, or sediment blockage. Replacement of the subsurface drainage tiles or pipes requires excavation and replacement of the layers above the tiles or pipes. The subsurface drainage tiles or pipes typically require replacement within 20 years.

The costs to prepare land in the original construction or reconstruction of push-up or natural-soil greens and tees are still classified as nondepreciable land. However, the costs of preparing land for modern greens, which are so closely associated with depreciable assets (such as a network of underground drainage tiles...