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Nonprofit Law/Church Parking Lot Depreciation

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Question
Hi Mr. Mechanic,

Our church recently completed a tear-out and reconstruction of our asphalt parking lot to the order of approximately $200,000.

Can you please advise as to what "useful life" I should use for depreciation?  I was hoping to use straight-line depreciation and "expense" this lot over time in order to more accurately reflect our balance sheet and income statement activity.

Thank you very much!

Answer
You are welcome.

Associate Professor of Accounting, Frank A. Marino (CPA) has a fine
28 page introduction "Handbook for the Church Audit Committee" and
he observes:
--- Start of Excerpt ---
For many churches, especially smaller ones, generally accepted
accounting principles (GAAP) are usually a non-issue. Compliance
with such principles would only become important if the church had
a need to publish its financial statements to outside parties, such
as a lending institution, and was therefore required to have the
statements audited by an independent outside auditing firm.
Statements prepared for internal use by the church and its members
need not conform to generally accepted accounting principles,
although they certainly can be so prepared if the church wishes. It
is usually much simpler for the church to prepare just those
statements and schedules which it finds most useful, however
--- End of Excerpt ---
http://goo.gl/mi5WXF
(page 8)

Then on page 16, "Among those churches which do present such [real] property, there will be even more divergence of practice regarding the recording of depreciation on the property."

Therefore, you can use straight-line depreciation if you wish.

Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather more information.

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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