Rev. Proc. 74-28

Section 1. Purpose.

The purpose of this Revenue Procedure is to prescribe under section 1.167(a)-11 of the Income Tax Regulations revised and supplementary asset guideline classes for the manufacture of railroad transportation equipment which include subsidiary assets, and to prescribe asset guideline depreciation periods and ranges and asset guideline repair allowance percentages for these classes.

Section 1.167(a)-11(b)(5)(vii) of the regulations provides, in part, that a taxpayer may exclude from an election all subsidiary assets first placed in service during the taxable year of election in an asset guideline class provided that (a) the unadjusted basis of eligible subsidiary assets first placed in service during the taxable year in the class is as much as 3 percent of the unadjusted basis of all eligible property first placed in service during the taxable year in the class and (b) such subsidiary assets are first placed in service by the taxpayer before the earlier of (1) the effective date of the first supplemental asset guideline class including such subsidiary assets or (2) January 1, 1974.

To provide supplemental asset guideline classes which include subsidiary assets, such assets and the quantitative relationships between these assets and other section 1245 property used in railroad transportation equipment manufacturing have been studied and appropriate guideline classes, guideline depreciation periods and ranges, and guideline repair allowance percentages prescribed.

Sec. 2. Asset Guideline Classes and Periods, Asset Depreciation Ranges, and Annual Asset Guideline Repair Allowance Percentages for Assets Used in the Manufacture of Railroad Transportation Equipment.

The asset guideline classes, periods, ranges, and repair allowance percentages are established as set forth below.

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Rev. Proc. 72-10, 1972-1 C.B. 721, is modified by the revised and supplementary guideline classes 37.4 Manufacture of railroad transportation equipment, 37.41 Manufacture of locomotives, and 37.42 Manufacture of railroad cars, with prescribed asset guideline depreciation periods, ranges, and repair allowance percentages.

Sec. 4. Effective Date.

The asset guideline periods, ranges, and repair allowance percentages for classes 37.41 Manufacture of locomotives and 37.42 Manufacture of railroad cars are effective for property first placed in service subsequent to December 31, 1973, to which section 1.167(a)-11 of the regulations applies.

¹ Also released as Technical Information Release 1302, dated August 23, 1974.