Trampoline Park Depreciation: The Invoice Decides $356,000
Two trampoline park projects can spend the same $2.0 million and deduct $10,700 or $1,707,088 against the first year’s income. The two venues can share a floor plan, a supplier and a city. What separates them is how the invoice describes what was bought.
US federal tax law puts equipment used to provide entertainment for a fee in a 7-year recovery class. Interior improvements sit in a 15-year class. Structural and mechanical work sits at 39 years and cannot use the first-year deduction at all. A single turnkey invoice that reads “design, supply and install” gives the accountant no reason to make that split, so the whole amount lands in the slowest bucket.
This article prices that mistake on a reference build, shows the arithmetic line by line, and sets out what an equipment invoice has to contain so the split can be made. Everything below is arithmetic on published IRS tables plus the state rule that quietly cancels part of the benefit. It is not tax advice, and it is not a substitute for the CPA who signs your return.
One more framing note. The $2.0 million figure in the tables is an input, not a finding. Swap in your own quote and the same percentages apply.
1. Four buckets hide inside one invoice
A trampoline park is not one asset. It is four, and only two of them are work on the building. Asset class 79.0 of the IRS tables covers “assets used in the provision of entertainment services on payment of a fee or admission charge,” and names bowling alleys, billiard halls, theaters, concert halls and miniature golf courses as examples. That class has a 10-year class life, which produces a 7-year recovery period under the general depreciation system. Trampoline courts are not named in the list, and section 5 deals with that gap directly.
The second bucket is the interior work: party rooms, a café counter, restrooms, flooring, lighting, paint and millwork. If the tenant pays for it and the building is an existing nonresidential structure, that spend is qualified improvement property, recovered over 15 years. The third bucket is base-building work: HVAC, the electrical service upgrade, sprinkler modifications and steel. Those are structural components of the building, recovered over 39 years. The fourth is the money you spend before a single guest arrives.
| Bucket | What usually lands here | Recovery period | First-year deduction available | Share of the $2.0M model |
|---|---|---|---|---|
| Attraction equipment | Jump courts, pads, springs, airbag, foam pit, ninja course, soft play, climbing | 7 years | Yes, 100% | $1,250,000 (63%) |
| Interior improvements | Party rooms, café, restrooms, flooring, lighting, millwork | 15 years | Yes, 100% | $450,000 (23%) |
| Building systems | HVAC, electrical service, sprinkler work, mezzanine steel | 39 years | No | $250,000 (12%) |
| Pre-opening costs | Rent during fit-out, wages, pre-opening marketing, training | 15-year amortization | Partially, first $5,000 | $50,000 (2%) |
The first-year column is the reason this matters. Since 2025 the additional first-year deduction, usually called bonus depreciation, is 100% and permanent for qualified property acquired after 19 January 2025. Qualified property means MACRS property with a recovery period of 20 years or less, so the 7-year and 15-year buckets qualify and the 39-year bucket does not. The rule comes from the IRS guidance issued in January 2026, and it applies to new and used property alike, as long as you did not use the asset before and did not buy it from a related party.
A park that buys equipment secondhand from a closing venue still qualifies. A park that buys a building does not get the same treatment for the building itself.
2. Where the line gets drawn wrong
Four coding mistakes account for most of the gap, and three of them start at the supplier rather than the accountant.
2.1 A turnkey invoice with no equipment line
What it is One contract covering design, manufacture, shipping, installation and commissioning, invoiced as a single lump sum.
What it decides Whether the accountant sees a depreciable asset or a leasehold improvement. With no line items, the safe treatment is the building. That is how a $1.25 million equipment package ends up on a 39-year schedule at 0.535% a year.
What to verify The invoice should name each attraction, its quantity and its unit price, and separate equipment from freight, installation labor and commissioning. Freight and import duty belong in the depreciable basis, so they raise the number you are writing off, but they need their own lines to be visible. Our article on equipment import duty by origin covers how much that adds before the basis question even starts.
2.2 Treating all interior work as qualified improvement property
Qualified improvement property is narrower than the name suggests. It covers interior improvements to an existing nonresidential building, but it excludes enlargements of the building, and it excludes elevators, escalators and the internal structural framework. A mezzanine that carries plant or a new structural frame is the clearest example. Budget it as 39-year property and do not let it ride in the 15-year total.
The same logic applies to HVAC and to the electrical service upgrade. A new rooftop unit serving a jump floor is a building system, not equipment, however much it exists because of the trampolines. Splitting it out costs nothing at the design stage and is very hard to unwind after the return is filed.
2.3 Pre-opening costs that look like expenses
Rent paid during a four-month fit-out, wages for staff in training, and marketing before the doors open are start-up costs. They are not deductible as ordinary business expenses, because the business was not yet operating. The rule allows up to $5,000 in the first year, reduced once start-up spending passes $50,000, with the remainder amortized over 180 months.
On the model here, $50,000 of pre-opening spend produces $5,750 in year one and $3,000 a year after that. That is a small number against the $1.7 million above, but it is the line owners most often assume is already expensed. The mechanics of a long fit-out, and what a late opening does to cash, are set out in our piece on the cost of opening 100 days late.
2.4 Mixing up the date the equipment arrived with the date it was ready
Property is placed in service when it is ready and available for its intended use, not when it ships. For the 100% deduction the acquisition date also matters, because property acquired under a binding contract written on or before 19 January 2025 falls under the older phase-down rules. Keep the purchase order, the deposit receipt and the commissioning sign-off. If an auditor asks why a 2026 purchase qualified, those three documents answer it.
3. Year one, three codings
Here is the same $2.0 million under three treatments. Path A takes the 100% deduction on the equipment and the interior work, and depreciates the building systems normally. Path B is the same correct classification with the bonus election switched off. Path C is what happens when the invoice is coded as one leasehold improvement and everything lands on a 39-year schedule.
| Deduction | Path A: bonus taken | Path B: no bonus, correct lives | Path C: all property at 39 years |
|---|---|---|---|
| Year 1 | $1,707,088 | $208,212 | $10,700 |
| Cumulative to year 3 | $1,725,908 | $833,008 | $113,260 |
| Cumulative to year 5 | $1,744,728 | $1,185,370 | $215,820 |
| Cumulative to year 10 | $1,791,778 | $1,645,631 | $472,220 |
The arithmetic behind Path A, with the conventions stated so you can repeat it:
Attraction equipment $1,250,000 x 100% = $1,250,000 Interior improvements $450,000 x 100% = $450,000 Building systems $250,000 x 0.535% = $1,338 Pre-opening costs $5,000 + ($45,000 / 180 x 3) = $5,750 Year-one total = $1,707,088
The 0.535% is the mid-month convention for nonresidential real property placed in service in October: the annual straight-line rate of 2.5641% applied to two and a half months. Path B uses 14.29% for 7-year property, which is the 200% declining balance method with the half-year convention, and 5.00% for 15-year property, which is 150% declining balance halved for the first year. The 180 in the pre-opening line is the amortization period in months.
Path C is not a straw man. It is what a lump-sum invoice produces by default, and it costs 15 years of deferral on money the owner has already spent.
4. What the deduction is worth in cash
A deduction is worth the tax rate applied to it, and only if there is income to absorb it. At the 21% federal corporate rate, the three paths produce the following.
| Measure | Path A | Path B | Path C |
|---|---|---|---|
| Year-one tax saved at 21% | $358,488 | $43,725 | $2,247 |
| Present value of tax saved, 10 years at 8% | $343,364 | $257,556 | $64,369 |
| Taxable income needed to absorb year one | $1,707,088 | $208,212 | $10,700 |
| Share of the $2.0M build returned as cash | 17.9% | 2.2% | 0.1% |
The gap between Path A and Path C is $356,241 of cash in the first filing year, and $278,995 once both streams are discounted over ten years. The gap between Path A and Path B, which is the value of the bonus election alone with the classification held constant, is $85,808 in present value.
That last comparison is the useful one, because it isolates the election from the classification. Getting the split right is worth more than taking the election. Getting both right is worth the full $356,241.
4.1 The absorption problem
To use $1,707,088 of deduction in year one, the owner needs $1,707,088 of taxable income that year, from this park or from somewhere else. A first-year venue rarely has it. What happens instead is a net operating loss carried forward, and carryforwards are limited to 80% of taxable income in the year they are used. The deduction does not disappear, but it arrives later than the table implies.
This is the case for electing out of the bonus on some classes. An election out is made class by class, so an owner can take 100% on the equipment and skip it on the interior work, or the reverse. The arithmetic to run is simple: if the loss is going to sit for three years, discount the deferred shield at your borrowing rate and compare it with the shield you would get by spreading the same deduction over seven years.
4.2 What it costs later
The deduction is a timing benefit, not an exclusion. Claimed depreciation reduces the asset’s basis, so on a sale the gain up to the amount already deducted is recaptured, and recapture on equipment is ordinary income rather than capital gain. For an owner in the top individual bracket, that can mean paying a higher rate at exit than the rate saved at entry.
An owner who plans to hold for a decade and never sell keeps the full benefit. An owner who builds to sell in year three is trading a 21% or 37% saving now for ordinary-income treatment later, and should run both numbers before electing.
5. What the data does and does not show
The tax tables are published and the arithmetic above is reproducible. The classification is a judgment, and four limits belong on the record.
The class 79.0 reading is an interpretation, not a ruling. Trampoline courts are not named in the asset class description. The text covers assets used to provide entertainment services for a fee, which fits an indoor venue, but a practitioner could argue for class 80.0, theme and amusement parks, which carries a 12.5-year class life and still lands in the same 7-year recovery period. Either way the asset clears the 20-year threshold, so the 100% deduction is available and the year-one figure barely moves. Neither reading supports coding a jump floor as 39-year building property. No private letter ruling names trampoline parks, and we are not aware of one.
The cost split is our model. The 63/23/12/2 division is a reasonable shape for an indoor venue of roughly 25,000 sq ft (2,323 m²), and it is not a market average. A park built into a shell with no mechanical work will have a smaller third bucket. A park in a former big-box store with a new roof and a mezzanine will have a larger one. Our comparison of project cost per square foot across five filings shows how far the total moves, and the split moves with it.
It says nothing about state tax, property tax or entity structure. Section 6 covers one state in detail because it is the largest exception. Local personal property tax on equipment, sales tax on materials and the choice between an LLC and a C corporation all change the answer, and none of them are in these tables.
Do not read causation into the invoice. Parks with itemized invoices are not better run than parks with lump-sum invoices. The invoice is an artifact of how the supplier sells, and the tax outcome is a consequence of the artifact, not evidence about the operator.
6. The state line nobody models
California does not conform to the federal bonus depreciation rules. Section 17250 of California’s Revenue and Taxation Code states that section 168(k) does not apply for personal income tax purposes, and the Franchise Tax Board repeats the point in its depreciation form instructions: California law does not conform to the federal rules under section 168(k). A park in California takes the 100% deduction on the federal return, adds the difference back on the state return, and keeps two schedules for the life of the asset.
The state section 179 election is narrower too. California caps it at $25,000 and phases it out once qualifying purchases pass $200,000, which for a $2.0 million build leaves very little. C corporations face a wider gap still, because California’s corporation tax law does not adopt MACRS at all and follows its own class-life system.
The practical effect is that the benefit in section 4 is a federal number. In a state with a high income tax, the after-tax value of Path A falls, though it stays well above Path C, because the 7-year and 15-year lives still apply on the state return even without the first-year deduction.
Two habits follow. First, model federal and state separately before choosing a structure. Second, if the project is in a state that decouples, the bonus election is worth less than the classification, which makes the invoice question the higher priority.
7. What the equipment invoice has to say
The owner controls this, and it is the only part of the chain that cannot be fixed afterwards. Six items, in the order they cause trouble.
1. Equipment, freight, installation and commissioning on separate lines. Four lines, four amounts, one total. A supplier that will not split them is asking you to accept a 39-year schedule.
2. Itemized by attraction. Jump court, dodgeball court, foam pit, airbag, ninja course, soft play, climbing wall, each with quantity and unit price. This is also what an insurer and a valuer will ask for.
3. Installation scope stated. Bolted to the structure is not the same as free-standing, and the difference can move a component between buckets. Say which is which.
4. Building work on a separate contract. Mechanical, electrical, sprinkler and steel should not appear on the equipment invoice at all. Keeping them apart protects the 7-year treatment of everything else.
5. Delivery and commissioning dates recorded. Two dates, both documented, because placed-in-service and acquisition date are different tests.
6. A schedule the accountant can read. One page listing asset, quantity, unit price, extended price and installation status. It costs the supplier an hour and saves the owner a cost segregation study on the equipment portion.
Our trampoline product range is quoted this way by default, and the design-to-delivery process shows where the schedule fits before the deposit.
8. Decision rules, not forecasts
Five conditions, five answers. None of them depend on what the market does next year.
If year-one taxable income is below the deduction, elect out class by class rather than accepting a carryforward. Take the bonus on the equipment and spread the interior work, or the reverse, depending on which keeps the shield inside the years you can use it.
If the project is in California or another decoupled state, run two returns in the model before signing the lease. The federal answer overstates the benefit, sometimes by most of it.
If the landlord owns the improvement, you cannot depreciate it. Check who is named on the invoice and who owns the asset at the end of the term, because a landlord-funded fit-out is the landlord’s depreciable property, not yours.
If you plan to sell within three to five years, treat the bonus as a loan rather than a gift. Recapture converts the deducted amount into ordinary income at exit, and the arithmetic in section 4.2 changes the ranking of the three paths.
If the lease is shorter than the recovery period, the remaining basis is written off at the end of the term, so the difference between 15 and 39 years shrinks. A five-year lease with no renewal makes the 39-year schedule less damaging than the table suggests.
9. Summary
The deduction is not decided by the accountant. It is decided by what the invoice says, months earlier, when nobody is thinking about tax. Four buckets, four recovery periods, one of which cannot use the first-year deduction at all.
On a $2.0 million build, correct classification with the bonus election produces $1,707,088 of year-one deduction and $358,488 of federal tax saved. The same spend coded as one leasehold improvement produces $10,700 and $2,247. The difference is $356,241 in the first filing year and roughly $279,000 in present value over ten years.
Getting the split right is worth more than the election itself, and it survives a state that refuses to conform. That is the part an owner can control before the first court is bolted down.
10. Three Things You Can Do Today
1. Ask for the split before you sign. Request a quote with equipment, freight, installation and commissioning on separate lines, itemized by attraction. If the supplier cannot produce it, that is information about the supplier.
2. Put the bucket question to your CPA in writing. Send the four categories and the amounts, and ask which recovery period applies to the mezzanine and the HVAC. The answer takes ten minutes and prevents a 39-year default.
3. Model the absorption year. Take your projected year-one taxable income, compare it with the deduction, and decide the election-out question before the return is due rather than after. If you want a starting point, our break-even attendance model and loan cost calculation give you the two numbers that decision needs.
FAQ
How long does trampoline park equipment depreciate over for US tax?
Seven years, if the equipment fits asset class 79.0, which covers assets used to provide entertainment services for a fee. The class life is 10 years and the general depreciation system recovery period is 7 years. Interior improvements are 15-year property, and building systems such as HVAC are 39-year property. The classification depends on what the asset does, not on what the invoice calls it.
Can I write off an entire trampoline park in the first year?
Only the parts with a recovery period of 20 years or less. Equipment and qualified improvement property qualify for the 100% first-year deduction for property acquired after 19 January 2025. HVAC, electrical service work, sprinkler modifications and structural steel do not, because they are building components recovered over 39 years. A typical project therefore writes off most of its cost in year one and not all of it.
Does bonus depreciation apply to leasehold improvements?
Yes, when the work is qualified improvement property: interior improvements to an existing nonresidential building, paid for by the taxpayer, placed in service after 2017. Enlargements of the building, elevators, escalators and internal structural framework are excluded, and those exclusions are where most of the arguments start.
What records do I need for the January 19, 2025 acquisition date?
The purchase order or signed contract with its date, the deposit receipt, the shipping documents and the commissioning sign-off. Property bought under a binding written contract dated on or before 19 January 2025 falls under the earlier phase-down rules even if it was delivered later, so the contract date is the document that matters most.
Is a cost segregation study worth it for a $2 million trampoline park?
Usually not for the equipment, because the supplier’s itemized invoice already separates it. It can be worth it for the building systems, where a study may reclassify parts of the mechanical and electrical work, and for a project large enough that the reclassified amount covers the study fee. Ask for the invoice split first and treat the study as the second step.
Sources
- Internal Revenue Service, “Treasury, IRS issue guidance on the additional first year depreciation deduction amended as part of the One, Big, Beautiful Bill” (IR-2026-06), 14 January 2026. irs.gov
- Internal Revenue Service, Publication 946 (2025), How To Depreciate Property, including the property class list and the MACRS percentage tables. irs.gov
- Internal Revenue Service, Publication 535, Business Expenses, start-up costs and the $5,000 first-year allowance. irs.gov
- California Franchise Tax Board, 2025 Form 3885L instructions, Depreciation and Amortization, federal and state calculation differences. ftb.ca.gov
- 26 U.S.C. section 168, Accelerated Cost Recovery System, including the qualified improvement property definition in subsection (e)(6). law.cornell.edu
- 26 U.S.C. section 195, Start-up expenditures, including the amortization period and the first-year allowance. law.cornell.edu
- 26 U.S.C. section 172, Net operating loss deduction, including the 80% limitation on carryforwards. law.cornell.edu
- Rev. Proc. 87-56, asset class 79.0 Recreation, class life 10 years, as reproduced in Rev. Proc. 74-32 and quoted in Collins Music Co. v. United States, 21 F.3d 1330 (4th Cir. 1994). worldlii.org