Rev. Proc. 74-37
Rev. Proc. 74-37; 1974-2 C.B. 491
- Cross-Reference
26 CFR 601.105: Examination of returns and claims for refund, credit
or abatement; determination of correct tax liability.
(Also Part I, Section 167; 1.167(a)-11.)
- LanguageEnglish
- Tax Analysts Electronic Citationnot available
Superseded by Rev. Proc. 77-10
Section 1. Purpose.
The purpose of this Revenue Procedure is to modify the annual repair allowance percentage and the description of assets included in asset guideline class 32.1 "Manufacture of glass products" provided by Rev. Proc. 72-10, 1972-1 C.B. 721. There is no change in the guideline depreciation period and range.
This Revenue Procedure also prescribes a new subclass and corresponding asset guideline period, asset depreciation range, and annual repair allowance percentage for special tools (subsidiary assets) used in qualified activities of asset guideline class 32.1 "Manufacture of glass products."
It is provided that the new asset guideline subclass for special tools is an addition to and part of existing class 32.1 "Manufacture of glass products," and such subclass is not separately subject to possible exclusion from the election provided for in section 1.167(a)-11(b)(5)(v) of the Income Tax Regulations.
Special tools are eligible property under the Class Life ADR system if subject to an allowance for depreciation under section 167 of the Internal Revenue Code of 1954. Where costs of special tools are properly expensed under section 162, such assets are not eligible property under the CLADR system. The determination of whether special tools including replacements are subject to an allowance for depreciation or expense shall be based upon the particular facts and circumstances.
The annual asset guideline repair allowance percentage for class 32.1 is modified based upon a detailed study of the glass industry repair and maintenance practice. If the asset guideline class repair allowance is elected in accordance with section 1.167(a)-11(d)(2)(ii) of the regulations, "cold tank repairs," including refractory relining expenditures to glass furnaces, shall be treated as deductible repairs within the provisions and limitations of section 1.167(a)-11(d)(2)(iv)(a) dealing with the application of the asset guideline class repair allowance.
The description of assets included in asset guideline class 32.1 "Manufacture of glass products" is modified by substituting "float" for "plate safety" to reflect the kind of flat glass produced.
Sec. 2. Asset Guideline Classes, Guideline Depreciation Periods and Ranges, and Annual Repair Allowance Percentages for the Manufacture of Glass Products.
The asset guideline classes, guideline depreciation periods and ranges, and annual repair allowance percentages are prescribed as set forth below.
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Asset Depreciation
Range (in years) Annual
_______________________ Asset
Asset Asset Guideline
Guide- Guide- Repair
line Description of Lower line Upper Allowance
Class Assets Included Limit Period Limit Percentage
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32.1 Manufacture of glass
products:
Includes assets used
in the production of flat,
blown or pressed products
of glass, such as float and
window glass, glass contai-
ners, glassware, and fiber-
glass. Does not include as-
sets used in the manufac-
ture of lenses _____________ 11 14 17 12.0
32.11 Manufacture of glass products
--special tools:
Includes assets defined as
special tools such as molds,
patterns, pallets, and speci-
alty transfer and shipping
devices such as steel racks
to transport automotive
glass, used in activities
as defined in Class 32.1.
Special tools are specifi-
cally designed for the
production or processing
of particular parts and have
no significant utilitarian
value and cannot be adapted
to further or different use
after changes or improvements
are made in the model design
of the particular part pro-
duced by the special tools.
Does not include general
purpose small tools such as
wrenches and drills, both
hand and power-driven, and
other general purpose equip-
ment such as conveyors,
transfer equipment, and mate-
rials handling devices _______ 2 2.5 3 10.0
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Sec. 3. Effects on Other Documents
Rev. Proc. 72-10 is modified by the annual asset guideline repair allowance percentage and the description of assets included in asset guideline class 32.1 "Manufacture of glass products" and the addition of asset guideline subclass 32.11 "Manufacture of glass products -- special tools" provided in this Revenue Procedure.
Sec. 4. Effective Date.
The asset guideline subclass, period, range, and annual repair allowance percentage for class 32.11 "Manufacture of glass products--special tools" are effective for property placed in service after December 31, 1973.
The modified annual repair allowance percentage and the description of assets included in asset guideline class 32.1 "Manufacture of glass products" and the corresponding guideline depreciation period and range are effective for the property and the taxable year to which section 1.167(a)-11 of the regulations apply. However, the taxpayer may, at his option, apply Rev. Proc. 72-10 without regard to this supplement for property placed in service in any such year beginning prior to January 1, 1974. Such option may be exercised for one such year and not for another or for all such years. Such option shall be exercised in making the election to apply section 1.167(a)-11 for such year and may not be revoked after the latest time for making such election and shall apply only with respect to that section.
1 Also released as Technical Information Release 1312, dated September 11, 1974.
- Cross-Reference
26 CFR 601.105: Examination of returns and claims for refund, credit
or abatement; determination of correct tax liability.
(Also Part I, Section 167; 1.167(a)-11.)
- LanguageEnglish
- Tax Analysts Electronic Citationnot available
