2.2.1.2. Recovery Period
Prior to the 1980s, the IRS attempted to estimate the actual useful life of property, plant, and equipment. It established multiple asset classes and guideline lives for each class, within which business owners had flexibility to set up their own depreciation schedules. But this proved cumbersome, and by 1986 the idea of taxpayer-specific, actual useful lives had been replaced by legally specified, economically useful lives. In the process, the number of asset classes was reduced from 125 to the following nine asset classes:
|
Depreciation Period |
Asset Classes |
|
3 years |
Tractor units for over-the-road use, race horses over two years old when placed in service |
|
5 years |
Automobiles, taxis, office equipment, computers, breeding cattle, dairy cattle, any property used in research and experimentation |
|
7 years |
Office furniture, agricultural machinery and equipment, natural gas gathering lines |
|
10 years |
Barges, tugboats, single-purpose agricultural structures, trees and vines bearing fruits or nuts |
|
15 years |
Fences, roads, bridges, wastewater treatment plants, natural gas distribution lines |
|
20 years |
Farm buildings other than single-purpose structures, the initial clearing and grading of land for electric utility transmission and distribution plants |