Appendix B — Table
of Class Lives and
Recovery Periods
The Table of Class Lives and
Recovery Periods has
two sections. The first section,
Specific Depreciable Assets Used
In All Business Activities,
Except As Noted,
generally lists assets used in
all business activities. It is
shown as Table B-1. The second
section, Depreciable Assets Used In
The Following Activities, describes assets used
only in certain activities. It
is shown as Table B-2.
How To Use
the Tables
You will need to look at
both Table B-1 and B-2 to
find the correct recovery
period. Generally, if the
property is listed in Table
B-1 you use the recovery
period shown in that table.
However, if the property is
specifically listed in Table
B-2 under the type of
activity in which it is
used, you use the recovery
period listed under the
activity in that table. Use
the tables in the order
shown below to determine the
recovery period of your
depreciable property.
Table
B-1. Check Table
B-1 for a description of
the property. If it is
described in Table B-1,
also check Table B-2 to
find the activity in
which the property is
being used. If the
activity is described in
Table B-2, read the text
(if any) under the title
to determine if the
property is specifically
included in that asset
class. If it is, use the
recovery period shown in
the appropriate column
of Table B-2 following
the description of the
activity. If the
activity is not
described in Table B-2
or if the activity is
described but the
property either is not
specifically included in
or is specifically
excluded from that asset
class, then use the
recovery period shown in
the appropriate column
following the
description of the
property in Table B-1.
Tax-exempt use property
subject to a lease.
The recovery period
for ADS cannot be less
than 125 percent of the
lease term for any
property leased under a
leasing arrangement to a
tax-exempt organization,
governmental unit, or
foreign person or entity
(other than a
partnership).
Table
B-2. If the
property is not listed
in Table B-1, check
Table B-2 to find the
activity in which the
property is being used
and use the recovery
period shown in the
appropriate column
following the
description.
Property not in either
table. If the
activity or the property
is not included in
either table, check the
end of Table B-2 to find
Certain Property for
Which Recovery Periods
Assigned.
This property generally
has a recovery period of
7 years for GDS or 12
years for ADS. See
Which Property Class
Applies Under GDS
and
Which Recovery
Period Applies
in chapter 4 for the
recovery periods for GDS
and ADS for the
following.
Residential
rental property
and
nonresidential
real property
(also see
Appendix A,
Chart 2).
Qualified
rent-to-own
property.
A motorsport
entertainment
complex placed
in service after
October 22,
2004.
Any retail
motor fuels
outlet.
Any
qualified
leasehold
improvement
property placed
in service after
October 22,
2004.
Any
qualified
restaurant
property placed
in service after
October 22,
2004.
Initial
clearing and
grading land
improvements for
gas utility
property and
electric utility
transmission and
distribution
plants placed in
service after
October 22,
2004.
Any water
utility
property.
Example 1.
Richard Green is
a paper
manufacturer. During
the year, he made
substantial
improvements to the
land on which his
paper plant is
located. He checks
Table B-1 and finds
land improvements
under asset class
00.3. He then checks
Table B-2 and finds
his activity, paper
manufacturing, under
asset class 26.1,
Manufacture of
Pulp and Paper. He uses the
recovery period
under this asset
class because it
specifically
includes land
improvements. The
land improvements
have a 13-year class
life and a 7-year
recovery period for
GDS. If he elects to
use ADS, the
recovery period is
13 years. If Richard
only looked at Table
B-1, he would select
asset class 00.3
Land
Improvements and
incorrectly use a
recovery period of
15 years for GDS or
20 years for ADS.
Example 2.
Sam Plower
produces rubber
products. During the
year, he made
substantial
improvements to the
land on which his
rubber plant is
located. He checks
Table B-1 and finds
land improvements
under asset class
00.3. He then checks
Table B-2 and finds
his activity,
producing rubber
products, under
asset class 30.1
Manufacture of
Rubber Products.
Reading the headings
and descriptions
under asset class
30.1, Sam finds that
it does not include
land improvements.
Therefore, Sam uses
the recovery period
under asset class
00.3. The land
improvements have a
20-year class life
and a 15-year
recovery period for
GDS. If he elects to
use ADS, the
recovery period is
20 years.
Example 3.
Pam Martin owns a
retail clothing
store. During the
year, she purchased
a desk and a cash
register for use in
her business. She
checks Table B-1 and
finds office
furniture under
asset class 00.11.
Cash registers are
not listed in any of
the asset classes in
Table B-1. She then
checks Table B-2 and
finds her activity,
retail store, under
asset class 57.0,
Distributive
Trades and Services,
which
includes
assets used in
wholesale and retail
trade. This
asset class does not
specifically list
office furniture or
a cash register. She
looks back at Table
B-1 and uses asset
class 00.11 for the
desk. The desk has a
10-year class life
and a 7-year
recovery period for
GDS. If she elects
to use ADS, the
recovery period is
10 years. For the
cash register, she
uses asset class
57.0 because cash
registers are not
listed in Table B-1
but it is an
asset used in
her retail business.
The cash register
has a 9-year class
life and a 5-year
recovery period for
GDS. If she elects
to use the ADS
method, the recovery
period is 9 years.
