Leo and Evelyn Trentadue, (2007)

Docket Number: 3510-04

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Leo and Evelyn Trentadue, (2007)

128 T.C. No. 8

UNITED STATES TAX COURT LEO AND EVELYN TRENTADUE, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 3510-04. Filed April 3, 2007.

Ps depreciated trellising, drip irrigation systems, and a well as farm machinery or equipment, in connection with their farming activity of growing wine grapes. R determined that such property would have a longer class life and be depreciable as permanent improvements to land.

Held: The trellising was properly classified as farm machinery or equipment, and the irrigation systems and well should be classified as land improvements.

Philip J. Terry, for petitioners.

Cathy A. Goodson, H. Clifton Bonney, Jr., and Andrew R. Moore, for respondent.

OPINION GERBER, Judge: Respondent determined income tax deficiencies for petitioners' 1999 and 2000 tax years in the amounts of $12,339 and $5,473, respectively. The deficiencies are solely attributable to respondent's adjustments to items connected with petitioners' farming activity, which involved the growing of grapes for the production of wine. The issues remaining for our consideration involve the class life and depreciation recovery periods for three different assets used by petitioners in their farming activity. In particular we consider whether petitioners' wine grape trellises, irrigation systems, and/or well should be depreciated as land improvements, as determined by respondent (20-year class life) or as agricultural equipment, as claimed by petitioners (10-year class life).

Background Petitioners are husband and wife and resided in Geyserville, California, at the time their petition was filed in this case. Petitioners have operated, as a sole proprietorship, the Trentadue Winery and Vineyards (farm property) primarily in the immediate vicinity of their personal residence. In addition to petitioners' residence, the farm property includes a winery, a vineyard, an event center, and a well. During 1999 and 2000, the vineyard consisted of approximately 85 acres planted with grapevines. Petitioners sel...

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