We had a reader who passed along to Billboard Insider the following question.

“If you purchase a perpetual easement for the use of a billboard on the property, can the expense be set up on a depreciation / amortization schedule, say 15 years? Is it a factor if the permitted use specifically tied to the easement is legal non-conforming?”

I chatted with an OOH Industry CFO and a CPA who we have worked with for a number of years, and received two different responses.

The first, and maybe the most important, is to consult with your own tax advisor, in your area of operation. If you do not have one, this may be a good time to start your search. Every situation is unique and you may be dealing with both Federal and State tax law.

In general, and keeping in mind our first suggestion, if the easement payment was temporary, tied to the ground lease for the billboard, you could probably depreciate it over the term of the ground lease including extensions. Being a permanent easement, it is typically treated like the land (even though you don’t own the land) and is non depreciable or amortizable.

As to whether a permit is conforming or non-conforming it would have no bearing as the easement is tied to the land not the permit.

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