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 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.
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. For
residential rental property and nonresidential real property see
Appendix A, Chart 2 or Property Classes and Recovery Periods
in chapter 3
for recovery periods for both GDS and ADS.
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 the ADS method, 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 the ADS method, 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 the ADS method 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.
Table B-1
Table B-2
Table B-2
Table B-2
Table B-2
Table B-2
Table B-2
Table B-2
Table B-2
Table B-2
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