# Tamarrow Storage financial assumptions

Fictional total investment is $2,200,000, including $450,000 of nondepreciable land. The 72 drive-up units occupy three 36 by 10 meter rows. A small separate leasing office serves the fenced site. This is a full-business-use teaching estimate placed in service June 15, 2026, not a valuation or cost-segregation study.

## Classification assumptions

In this example the permanent unit partitions are treated as part of the leased real estate, not as removable equipment. Slabs, enclosure, roll-up doors, office construction, comfort HVAC and ordinary power stay on 39 years. No QIP or section 179 treatment is assumed.

The $25,000 camera, recorder, viewing monitor, alarm and related wiring allocation protects the leased buildings and their contents. The cameras are mounted on the buildings. In this example the allocation stays on the 39-year building schedule. The IRS Cost Segregation Audit Techniques Guide lists security equipment that protects a building and its contents with the building, and separately lists surveillance whose main purpose is to cut theft of a retailer's merchandise. Tenant belongings are not the operator's merchandise inventory, so that retail treatment is not assumed here. The independent perimeter fence and yard gate operator are separately allocated to 15-year site improvements. The presence of digital cameras or a removable recorder alone is not treated here as justifying a shorter class for this combined building-protection system. No later interior-improvement or section 179 election is assumed.

Office furniture retains 7 years under class 00.11 and administrative information systems retain 5 years under 00.12. Moving carts are assumed to use the 7-year default for property with no class life. A real operation may establish a different applicable class. The permanent masonry sign is conservatively 15-year site property as a single ground-mounted installation; no separate short-life advertising face is allocated.

Independent site drainage is separate from building plumbing and roof drainage. Generic clearing and permanent land grading are treated as land and are not included as an accelerated row. Tenant contents and visiting vehicles are excluded from this allocation.

## Allocation

| Component | Basis | Recovery period |
|---|---:|---|
| Storage aisles and paving | $300,000 | 15 years |
| Customer parking | $35,000 | 15 years |
| Site drainage and swale | $60,000 | 15 years |
| Foundations and slabs | $240,000 | 39 years |
| Permanent storage floors | $25,000 | 39 years |
| Storage walls and framing | $330,000 | 39 years |
| Permanent unit partitions | $150,000 | 39 years |
| Storage doors and hardware | $110,000 | 39 years |
| Office walls and windows | $75,000 | 39 years |
| Office partitions and floor | $30,000 | 39 years |
| Restroom and plumbing | $15,000 | 39 years |
| Fixed office cabinets | $10,000 | 39 years |
| Office furniture | $14,000 | 7 years |
| Office computers and network | $18,000 | 5 years |
| Moving carts and dollies | $8,000 | 7 years |
| Office heating and cooling | $18,000 | 39 years |
| General power and lighting | $45,000 | 39 years |
| Building security system | $25,000 | 39 years |
| Perimeter fence and gate | $65,000 | 15 years |
| Site walks and curbs | $20,000 | 15 years |
| Planted landscape beds | $25,000 | 15 years |
| Site light poles | $20,000 | 15 years |
| Ground-mounted entry sign | $15,000 | 15 years |
| Roofs and overhead framing | $97,000 | 39 years |
| **Total depreciable basis** | **$1,750,000** | |

Basis by class: 5 years $18,000; 7 years $22,000; 15 years $540,000; building $1,170,000.

Year-one depreciation is **$596,250.00 at 100 percent bonus** and **$49,992.86 without bonus**. Short-life rates without bonus are 20 percent, an unrounded 1/7 and 5 percent. The June building deduction is 6.5/468 of basis. The seven-year rate is calculated as an unrounded fraction; using the rounded 14.29-percent table rate adds $0.94. These are deductions, not cash savings.

## Sensitivities

If different facts supported the $25,000 security system as 5-year personal property, year-one depreciation would increase by $24,652.78 with bonus and $4,652.78 without bonus. If it instead qualified as an independent 15-year site improvement, the increases would be $24,652.78 and $902.78. Those alternative functions are not assumed here. If the $8,000 carts were 5-year rather than 7-year equipment, bonus year one would be unchanged and no-bonus year one would increase by $457.14. If the $15,000 permanent sign belonged to the building, bonus year one would decrease by $14,791.67 and no-bonus year one by $541.67.

## Primary sources

- IRS Publication 946: https://www.irs.gov/pub/irs-pdf/p946.pdf. Tables B-1 and B-2 and the default recovery rule.
- IRS Cost Segregation Audit Techniques Guide, Publication 5653: https://www.irs.gov/pub/irs-pdf/p5653.pdf. Building-protection versus merchandise-surveillance distinction, printed pages 180-181; functional use and permanence. The ATG is examination guidance, not a legal ruling for this fictional facility.
- Treasury regulation 1.48-1(e): https://www.ecfr.gov/current/title-26/section-1.48-1. The building and structural-component definitions guide the functional distinction used in this example.
- IRS Notice 2026-11: https://www.irs.gov/pub/irs-drop/n-26-11.pdf. The assumed additional first-year rate applies to qualifying assets acquired and placed in service after January 19, 2025.

No tax rate, cash-flow benefit, section 179 election or state tax treatment is illustrated.