In 1986, assets of different classes were given associated class lives. These class lives are formatted into tables that are viewable on the IRS website under Publication 946. Using these class life tables can be confusing to many. Such confusion may occur because the tables are lengthy, some assets have no class life with assigned recovery periods, and other assets fall into multiple asset classes. This will hopefully serve as a simplifying guide as to how to approach and use the tables.
Using Tables B-1 and B-2
As is stated on the IRS website, one needs to look at both Table B-1 and B-2 to identify the correct recovery period. Normally, if the asset is listed under B-1, the associated recovery period there is used. However, you must then also look at Table B-2 to see if the asset specifically matches an activity for use as listed in that table. If it does, the recovery period from Table B-2 overrides the less specific value found in B-1. Conversely, if there is no specific match in Table B-2, or if it is specifically excluded, the recovery period from Table B-1 stands.
What if Property is not listed under either table?
If this is the case, you should consult the end of Table B-2 to find Certain Property for Which Recovery Periods Assigned. Normally, the recovery periods used will be 7 years when using the General Depreciation System (GDS) and 12 years under the Alternative Depreciation System (ADS).
Hopefully this gave you a basic understanding of class life tables. Should you have any questions, please feel free to ask them here or on the questions page.
More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.