# Wrenfield Court: illustrative financial assumptions

Fictional acquisition of a four-story brick fourplex for $850,000, including $170,000 nondepreciable land; these illustrative allocations are not construction bids or a completed engineering study.

One two-bedroom, one-bath apartment on each of four floors, with a separate shared stair, communal basement laundry and a shared rooftop terrace; no real address or property is represented.

The main envelope is about 6 by 16.6 meters, about 4,290 gross square feet across four above-ground floors before the basement; dimensions illustrate the program and are not a measured appraisal.

100% business use, calendar tax year, acquired March 20, 2026 and placed in service April 15, 2026.

The building is residential rental property on the 27.5-year straight-line schedule with the mid-month convention, giving 8.5 months in its first tax year.

Eligible acquired property is assumed to satisfy the 100% bonus rules, including acquisition, prior-use and unrelated-party requirements; no ADS election or requirement is assumed.

Without bonus, 5-year assets use 200% declining balance and 15-year assets use 150% declining balance with the half-year convention; all assets enter service in April and no mid-quarter convention applies.

Apartment appliances, removable carpet and blinds, and the shared laundry machines are 5-year property. Glued plank, cabinets, bath fixtures, windows, shared stairs and general services stay with the building.

The attached rooftop terrace is conservatively treated as a permanent part of the roof on 27.5 years. Movable rooftop and apartment furniture is unclassified tenant or illustrative staging and receives no allocated basis.

Year-one deductions are not tax savings; passive-activity, at-risk and other limits can affect their current use. No tax rates or cash benefit are modeled.

## Allocation

| Component | Basis | Recovery |
|---|---:|---|
| Rear parking and paving | $24,000 | 15 years |
| Site walks | $8,500 | 15 years |
| Basement and foundation | $62,000 | 27.5 years |
| Basement laundry machines | $6,800 | 5 years |
| First-floor flooring | $9,000 | 27.5 years |
| First-floor walls | $96,750 | 27.5 years |
| First-floor kitchen and bath | $18,000 | 27.5 years |
| First-floor appliances | $4,000 | 5 years |
| First-floor carpet and blinds | $3,550 | 5 years |
| Second-floor flooring | $9,000 | 27.5 years |
| Second-floor walls | $96,750 | 27.5 years |
| Second-floor kitchen and bath | $18,000 | 27.5 years |
| Second-floor appliances | $4,000 | 5 years |
| Second-floor carpet and blinds | $3,550 | 5 years |
| Third-floor flooring | $10,000 | 27.5 years |
| Third-floor walls | $81,000 | 27.5 years |
| Third-floor kitchen and bath | $18,000 | 27.5 years |
| Third-floor appliances | $4,000 | 5 years |
| Third-floor carpet and blinds | $3,550 | 5 years |
| Fourth-floor flooring | $10,000 | 27.5 years |
| Fourth-floor walls | $81,000 | 27.5 years |
| Fourth-floor kitchen and bath | $18,000 | 27.5 years |
| Fourth-floor appliances | $4,000 | 5 years |
| Fourth-floor carpet and blinds | $3,550 | 5 years |
| Rear privacy fencing | $9,500 | 15 years |
| Waste pad and enclosure | $4,500 | 15 years |
| Exterior site lighting | $7,000 | 15 years |
| Installed planting | $6,000 | 15 years |
| Roof and shared roof terrace | $56,000 | 27.5 years |
| Total depreciable basis | $680,000 | |
| Land, nondepreciable | $170,000 | None |
| Total investment | $850,000 | |

## Year-one deductions

At 100% bonus: $37,000 + $59,500 + ($583,500 × 8.5 / 330) = **$111,529.55**. Without bonus: ($37,000 × 20%) + ($59,500 × 5%) + ($583,500 × 8.5 / 330) = **$25,404.55**. Arithmetic is calculated before rounding.

5-year basis: $37,000. 7-year basis: $0. 15-year basis: $59,500. Building basis: $583,500. The combined short-life allocation is 14.19% of depreciable basis.

## Conservative classifications

The 27.5-year building includes all four structural floors, the brick shell, windows, partitions, common stairs, glued plank, permanent kitchens and baths, foundation, laundry sink, folding counter, ordinary building services, roof membrane, attached terrace decking, guards and roof-access enclosure. The attached roof terrace is a permanent building improvement, rather than site paving. General plumbing, laundry venting and ordinary circuits receive no separate accelerated basis.

Removable appliances, tacked carpet and blinds are modeled on five years. The shared washers and dryers are property-owned residential rental appliances, rather than equipment of a separate commercial laundry business. Removable blinds are an illustrative judgment. Glued plank remains with the building; its installation method matters in a real study.

Rear private paving, walks, fencing, the waste pad and enclosure, freestanding site lights and installed rear planting are treated as fifteen-year land improvements. Public sidewalks, street, neighboring houses, existing street trees, waste containers and distant context carry no allocated basis. Apartment furniture and loose rooftop tables, chairs and planters are unclassified illustrative context. They do not turn the scenario into a furnished rental.

This is a fictional acquisition allocation, not a new-build cost estimate. The $850,000 price has not been supported by a South Philadelphia appraisal. A real engineering study would reconcile acquisition documents, land value, quantities, installation methods, condition and indirect costs.

## IRS sources

Publication 527 supplies the residential rental recovery framework and examples of short-life rental assets. Publication 946 and Notice 2026-11 address depreciation and the assumed bonus treatment. The Cost Segregation Audit Techniques Guide informs the treatment of structural components and asset documentation; it is audit guidance, not authoritative law.

- [IRS Publication 946](https://www.irs.gov/publications/p946)
- [IRS Publication 527](https://www.irs.gov/publications/p527)
- [IRS Notice 2026-11](https://www.irs.gov/pub/irs-drop/n-26-11.pdf)
- [IRS Cost Segregation Audit Techniques Guide (not authoritative law)](https://www.irs.gov/pub/irs-pdf/p5653.pdf)