That's a really interesting question. Your answer would be that how you treat the fence for tax purposes (asset / expense) depends on your continued ownership rights in the fence (or your lack thereof).
Typically, when something in the nature of a permanent fence is installed, it becomes an improvement to the land (like a building or driveway), and is therefore owned by that landowner, as the fence cannot be easily removed and simply transported to another location -- like can farm equipment or portable electric generators, for example.
However, in the case of, say, a contractor who installed the fence and hadn't been paid, and who also had lien rights to the fence until such time as they are paid, this could be classified as a short-term asset (not subject to depreciation) on their financial books.
Similarly, if you installed a fence on a neighbor's property, with their full consent, and they signed some sort of contract or other legal agreement with you that the fence still belongs to you, then this would become a business asset to be capitalized, and depreciated (or to take the Section 179 expensing election). Alternatively, if depreciated and depreciated, fences are considered 7-year MACRS property for tax purposes.
In the absence of any of that, though, it would seem clear that the fence would be legitimately classified as a business expense, if you no longer retain ownership rights to it (and because it is "attached," literally, to land belonging to someone else).
Thank you for asking this question.
