Recently we have performed a number of cost segregation studies on facilities that have acquired additional storage space by utilizing a mezzanine system. Mezzanine systems fall into one of two categories, (1) those that are permanent structures and (2) those that are modular or free standing.
Permanent structurally-supported mezzanines are integrated into the building’s framework and cannot be removed easily. Removal of the permanent structural system could impair the structural integrity of the building’s structural framing. Accordingly, the structural members of the mezzanine are considered a part of the building and depreciated as 39-year real property.
A free-standing mezzanine is a self-supporting structure that only relies on the building’s floor slab or sub-floor footing as a support base. These types of assemblies are typically sub-contracted to companies that specialize in the design and construction of mezzanine systems. The components are generally fabricated off-site and then assembled within the facility. Auto dealerships have used mezzanines in their parts warehouses as a solution for optimal storage space without increasing the floor area requirements. The easy addition/removal feature of the platforms including their reusability adds credence to their classification as personal property components with a five or seven-year depreciable life.
Even if a mezzanine is designed to be removable it can still be considered a real property component [See L.L. Bean, Inc. v. Commissioner, 73 TCM 2560 (1997)]. In this case the building was designed to incorporate and utilize the mezzanine in such a way that it was the first stop for freight elevators. Electrical and mechanical systems were suspended from the mezzanine deck and routed throughout the facility. These factors led the Tax Court to conclude that the mezzanine was directly related to the normal operation and maintenance of the building.