Carpeting and Specialty Flooring
Carpet is treated as not permanent in the restaurant, retail, and residential IRS matrices. Permanently adhered carpet is building in the pharmaceutical table. Raised access floors and athletic surfaces are not carpet rows. Whiteco permanence factors are a court test, not a statute. Educational information, not tax advice.
Educational information, not tax advice.
Updated 2026-10-14
Key takeaways
- The restaurant matrix treats all carpeting as not permanently attached for that industry.
- Retail and residential matrices treat carpet, VCT, and sheet vinyl the same way for those industries.
- The pharmaceutical matrix treats permanently glued carpet as a structural covering.
- Senate Report 95-1263, quoted in Publication 5653, discusses carpeting as an example in the personal-property legislative history.
- Photograph tack strip, glue, or pedestals; specialty floors need their own analysis.
- Do not treat a deductible carpet replacement as creating a five-year class by itself; capitalization and classification are separate questions.
Broadloom and carpet tile are the personal-property argument the IRS has tabulated for restaurants, retail, and residential rentals. Treas. Reg. §1.48-1(e)(2) still lists floors and permanent coverings such as paneling or tiling as structural components. Carpet is usually not tiling. The question is whether a particular installation is a permanent covering. Whiteco’s six factors — movability, design for permanence, expected affixation, difficulty of removal, damage on removal, and manner of affixation — are the court test for inherent permanence. They are not a statute and no single factor controls.
Publication 5653 quotes legislative history for special items such as carpeting in Chapter 2 and then, in Chapter 7, tells examiners how to treat carpet in named industries. For restaurants, all carpeting is treated as not permanent. For retail and residential rentals, all VCT, sheet vinyl, and carpeting are treated as not permanently attached. For pharmaceuticals, permanently glued VCT and carpet are building. Those sentences are examiner guidance, not holdings about every building.
Hospital Corp. of America applied section 1.48-1 under MACRS. AmeriSouth did not turn apartment carpet into a free-standing five-year class for every finish; most millwork and special finishes stayed with the buildings, while a short list of other items was allowed. Morrison’s kitchen floor tiles stayed structural. Courts split on floor finishes by attachment and function. Glue-down carpet in a courthouse corridor, if no matrix applies, is a Whiteco facts question.
Raised access floors in equipment rooms, athletic maple, poured gym surfaces, and industrial toppings are not “carpeting.” The pharmaceutical matrix treats equipment-specific raised floors as personal property. A data hall has no matrix; analogy to that pharma row still needs function and permanence support. Do not place a raised floor in the retail vinyl bucket. Casino and theater removable covering is treated as class 79.0 in that matrix and as class 57.0 outside those areas — another reminder that activity class, if the covering is personal property, is a second step under Rev. Rul. 2003-81 and Publication 946 Appendix B.
Scott Paper allocation does not apply to carpet. Electrical functional allocation is limited in the audit guide to primary and secondary electrical distribution. HVAC allocation is not appropriate in the restaurant matrix. Flooring is a covering analysis, documented with photographs of the attachment method.
Why the matrices treat carpet as removable
The retail, restaurant, and residential tables rest on a judgment that typical installations in those industries are not permanent coverings. That is why the guide can treat “all” carpeting as not permanent inside those tables and still treat glued laboratory carpet as building in the pharmaceutical table. Industry first, then facts.
Whiteco applied to a floor covering
Has this carpet been replaced in the ordinary fit-out cycle? Is it designed to last for the life of the building? Does removal destroy the slab or only lift adhesive? Tack-strip carpet that comes up in an afternoon looks different from resin that would take the finish off the concrete. Rev. Rul. 2003-54 used the same factors for canopies, which shows the test travels, but the asset still has to be identified correctly. Hospital Corp. of America applied section 1.48-1 under MACRS; it did not create a national carpet class. If the covering is the floor of the building, the regulation’s permanent-covering list is the starting text even when a nearby room has strippable vinyl.
Specialty floors
Raised access floors, sports surfaces, anti-fatigue industrial toppings, and clean-room resin systems need function as well as permanence. If the floor exists only to support process equipment or to create a plenum for that equipment, the pharmaceutical raised-floor row is the closest examiner guidance. If it is the walking surface of the building, it is closer to a structural covering.
Replacing carpet
Capitalization under Treas. Reg. §1.263(a)-3 and classification under section 1.48-1 are separate. A replacement can be a repair to the building structure or an improvement, depending on betterment, restoration, and adaptation. The new covering still needs its own permanence analysis. Do not treat a deductible carpet replacement as creating a five-year asset class by itself.
File contents
Finish schedules, photographs of edges and adhesive, and the industry matrix citation belong in the report. If no matrix applies, write the Whiteco factors against the installation method rather than borrowing a grocery-store sentence. Publication 5653 Chapter 4 expects reconciliation to cost and a legal analysis for each class. Estimating methods in Chapter 3 — detailed engineering from actual costs, published unit-cost estimates examiners have seen, residual estimation — are approaches described in the guide, not operational CostSeg SI product claims. Super Intelligence extraction is proposed. This page is educational information, not tax advice.
Sources
- 1IRS Publication 5653 — Cost Segregation Audit Techniques Guide (rev. 2-2025)(opens in a new tab)
Written for IRS examiners. The guide states it is not an official pronouncement of law and cannot be cited as authority. It predates the July 2025 law.
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