Whiteco Industries, Inc. v. Commissioner
The Tax Court set out six questions for deciding whether property is an inherently permanent structure or tangible personal property. Those questions are a Tax Court test, not a statute, and they remain the usual permanence analysis in cost segregation.
Educational information, not tax advice.
Updated 2026-10-14
Key takeaways
- The Whiteco questions are a Tax Court permanence test, not a Code section.
- No single factor controls, and attachment to land is not decisive.
- The facts were outdoor signs designed around short advertiser contracts; interior building items are analogical applications.
- Educational information, not tax advice.
Case record
- Court
- U.S. Tax Court
- Citation
- 65 T.C. 664 (1975)
- Decision date
- 1975-12-31
- Facts
- Whiteco erected outdoor advertising signs on poles set in the ground and surrounded by concrete. The signs were designed around advertiser contracts that typically lasted about five years. At the end of a contract the face was replaced, some stringers were replaced, and poles were replaced or straightened and recemented. Land leases, road changes, and advertiser demand often required the structures to be moved. Disassembly of a 40-foot sign’s poles took about an hour to an hour and a half. Only the portion of a pole encased in concrete was typically wasted.
- Issue
- Were the outdoor advertising signs “inherently permanent structures,” excluded from the investment tax credit, or tangible personal property under §48(a)(1)(A)?
- Holding
- The signs were not inherently permanent and constituted tangible personal property. Because that holding disposed of the case, the court did not decide Whiteco’s alternative argument that the signs were “other tangible property.”
- Reasoning
- Section 48 did not define tangible personal property. The committee reports and Treas. Reg. §1.48-1(c) exclude land and improvements such as buildings or other inherently permanent structures, including structural components. Local fixture law does not control. The court collected six questions from earlier cases: whether the property can be and has been moved; whether it is designed to remain permanently in place; what the circumstances show about expected duration; how hard removal is; how much damage removal causes; and how the property is affixed. Applied to these billboards, no factor showed permanence. The court also rejected the Commissioner’s reading of a committee-report reference to “advertising displays.”
- Relevance to cost segregation
- HCA applied the same permanence questions under MACRS. The IRS later used the criteria in examinations and, according to the audit guide, acquiesced in them (AOD 1977-142). They are a Tax Court test for inherent permanence, not a statute and not a substitute for the regulation’s structural-component list. Attachment to land does not by itself make an item permanent.
Whiteco Industries, Inc. v. Commissioner, 65 T.C. 664 (1975), asked whether outdoor advertising signs qualified for the investment tax credit. The Commissioner treated the signs as inherently permanent structures. Whiteco pointed to a body of Court of Claims billboard cases and to the committee-report statement that tangible personal property is not defined narrowly and need not follow state fixture law.
The Tax Court held that the signs were tangible personal property. It walked through six questions that earlier opinions had used when permanence was disputed. Whiteco’s signs could be and had been moved. They were built to last a typical five-year advertising contract, not indefinitely. Leases expired, landowners developed sites, and roads moved. Removal was relatively quick. Much of the assembly survived a move. Concrete around the pole bases did not make the structures permanent when the poles were routinely pulled.
The opinion is also a caution about reading legislative history in isolation. The Commissioner relied on a House report listing “advertising displays” among assets that would not ordinarily qualify as “other tangible property” used in specified activities. The court, following Alabama Displays, treated that passage as addressing a different statutory category and an unclear phrase. It refused to treat a committee example as a ban on outdoor signs that otherwise met the personal-property definition.
Cost segregation studies still use the six questions when an item is affixed but may not be part of the building’s operation or maintenance. The regulation remains the definition of a structural component. Whiteco does not say that every bolted item is personal property, and it does not say that a sign, partition, or rack is 5-year property in every setting. L.L. Bean later held that a theoretically movable rack system that actually supported roof and walls was an inherently permanent structure. Trentadue later applied the same factors to vineyard property and split the results. Super Intelligence, as proposed on this site, would organize those fact questions — it is not described here as an operational classifier.
This page is educational information, not tax advice. The factors are evidence, not a statute, and the result is specific to Whiteco’s outdoor signs.
The six questions
The court asked: (1) Is the property capable of being moved, and has it in fact been moved? (2) Is it designed or constructed to remain permanently in place? (3) Do the circumstances show the expected or intended length of affixation? (4) How substantial and time-consuming is removal — is the property “readily removable”? (5) How much damage will the property sustain upon removal? (6) What is the manner of affixation to the land?
Whiteco answered each question on a billboard record. Later cases reuse the same list for interior partitions, site features, and agricultural improvements. The answers change with the record. A factor that favored Whiteco — actual prior moves under short contracts — is often missing in a newly built apartment or hospital.
Accessories to a business
The committee reports said assets accessory to a business, such as machinery, printing presses, grocery counters, and display racks, generally constitute tangible personal property even if local law calls them fixtures. That “accessory” language is legislative history applied through cases. It is not a sentence in Treas. Reg. §1.48-1(e)(2)’s structural-component list.
Calling an item an accessory does not finish the analysis. The item still cannot be an inherently permanent structure or a structural component relating to operation or maintenance of the building.
Weight and later use
Whiteco is a regular Tax Court opinion. The audit guide reports IRS acquiescence in the permanence criteria. HCA carried the criteria into MACRS classification. None of that converts the six questions into a statute or into a checklist that always produces personal property.
Verification. Verified from the OpenJurist text of 65 T.C. 664 (decided December 31, 1975).
Sources
- 1
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- 3IRS 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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