Tangible Personal Property

Personal property refers to all property held for investment or productive use by a trade or business, tangible and intangible, that is not considered real property. Tangible personal property are objects that can touched, excluding cash, securities, and real estate.   The most common types of tangible personal property include: motor vehicles, aircraft and vessels; business and production equipment; livestock, harvested crops; as well as artwork, jewelry, gems, and other collectibles.

IRC §48, which deals with investment credits, defines tangible personal property as:

"[a]ny tangible property except land and improvements thereto, such as buildings or other inherently permanent structures (including items which are structural components of such buildings or structures).  Thus, buildings, swimming pools, paved parking areas, wharves and docks, bridges, and fences are not tangible personal property.  Tangible personal property includes all property (other than structural components) which is contained in or attached to a building.  Thus, such property as production machinery, printing presses, transportation and office equipment, refrigerators, grocery counters, testing equipment, display racks and shelves, and neon and other signs, which is contained in or attached to a building constitutes tangible personal property for purposes of the credit allowed by Section 38."

IRS Pub. 526 defines tangible personal property as:

"[a]ny property, other than land or buildings, that can be seen or touched. 

It includes furniture, books, jewelry, paintings, and cars."

The “like-kind” requirement is more challenging for personal property than for real property, as both the relinquished and replacement tangible personal properties must be in either the same General Asset Class or the same Product Class.

Included among the General Asset Classes are the following:

• Office furniture, fixtures, and equipment
• Data handling equipment, except computers
• Information systems (computers, etc)
• Airplanes and helicopters (non-commercial only)
• Automobiles, including taxis
• Buses
• Light and heavy general-purpose trucks
• Railroad cars and locomotives
• Tractor units for use over the road
• Trailers and trailer-mounted containers
• Vessels, barges, tugs, and similar water transportation equipment, except those used in marine construction
• Industrial steam and electric generation and/or distribution systems

Product Classes are determined by referring to the 6-digit product class within Sectors 31,32, and 33 of the North American Industrial Classification System (‘NAICS’).