Rev. Rul. 2014-17 - Asset class of tangible depreciable assets used in converting corn to fuel-grade ethanol 

May 20:  The IRS today released an advance copy of Rev. Rul. 2014-17 concerning the asset class for the depreciation of tangible assets that are used in converting corn to fuel-grade ethanol.

Read Rev. Rul. 2014-17 [PDF 25 KB]

Background

The taxpayer owns a facility operated primarily to produce fuel grade ethanol from corn.


The taxpayer then sends the ethanol solution to distillation columns to separate the ethanol from the solids and water. After distillation, the taxpayer produces fuel grade ethanol by further processing part of the output using dehydration to increase alcohol content. Once the dehydration is complete, the taxpayer blends the fuel grade ethanol with 2% to 5% denaturant (such as natural gasoline or unleaded gasoline) and sends it to storage pending sale.


The taxpayer also processes the solids and other liquids derived from the distillation to produce distillers grains, an animal feed supplement, which it sells. More than 50% of the economic output at the facility is from fuel grade ethanol production.

Rev. Rul. 2014-17

The IRS concluded that the proper asset class for depreciation of tangible assets used in converting corn to fuel grade ethanol is asset class 49.5 (other than section 1250 property not described in asset class 49.5 and assets classified in asset classes 00.11 through 00.4 of Rev. Proc. 87-56).




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