Flooring and Floor Coverings

A floor can be the structural slab, which is part of the building, or a covering on that slab. Treas. Reg. §1.48-1(e)(2) lists floors and ceilings, as well as any permanent coverings therefor such as paneling or tiling, as structural components. Tangible personal property excludes those items. A building is a structure enclosing space, usually roofed, used for shelter, housing, or working, office, parking, display, or sales space. Ceramic tile, wood parquet, and epoxy toppings are the usual permanent-covering examples in Publication 5653’s retail matrix.

Whiteco Industries v. Commissioner framed six questions for whether property other than machinery is inherently permanent: whether it can be and has been moved; whether it is designed to remain permanently; expected length of affixation; difficulty of removal; damage on removal; and manner of affixation. Those questions are a Tax Court test, not a statute. Hospital Corp. of America held that the section 1.48-1 tests still apply under MACRS. Carpet and vinyl arguments usually live in Whiteco-style permanence, not in the machinery examples in section 1.48-1(c).

Publication 5653’s retail and residential matrices state that, for those industries, all VCT, sheet vinyl, and carpeting will be treated as not permanently attached and therefore as section 1245 property in class 57.0. The restaurant matrix treats all carpeting as not permanent. The pharmaceutical matrix treats permanently adhered VCT and carpet as building. The casino matrix treats removable floor covering in casino and theater areas as recreation-class property and, outside those areas, under class 57.0. The guide says each matrix reflects a general fact pattern for one industry and may not apply to others. There is no office-building flooring matrix.

Morrison denied kitchen floor tiles and sanitary floors as structural on cafeteria facts. Metro National’s facts involved ceilings more than floors, but the same permanence idea appears. AmeriSouth kept most finish claims with apartment buildings. Courts have split because some coverings come up with little damage and others are the floor of the building. Epoxy, quarry tile, and hardwood that would be destroyed in removal are the building side in the retail table.

Scott Paper functional allocation does not apply to flooring. Do not percentage-split a slab. Raised access floors dedicated to process equipment are a pharmaceutical-matrix personal-property row, not a vinyl row. Athletic maple, industrial toppings, and data-hall pedestals need their own function and permanence analysis. AmeriSouth kept most finish claims with apartment buildings, which is why a residential vinyl row is still examiner guidance for that industry rather than a holding that every floor covering is personal property.