Question

Exhibit 8.1 has a listing of the cost recovery periods used under the Modified Accelerated Cost Recovery System (MACRS) for various types of property. The exhibit indicates that there are express provisions for assets used in agriculture and transportation equipment. Also, on page 8-22, the text indicates that different recovery periods are used under the Alternative Depreciation System (ADS).

1.         What is the MACRS cost recovery period for each type of asset specifically identified by the IRS as being used in agriculture (including farming and ranching)?

2.         What is the MACRS cost recovery period for each type of asset specifically identified by the IRS as being used in railroad transportation?

3.         What are the ADS recovery periods for each type of asset in the answers to questions 1 and 2?

Please answer each question in complete sentences, and cite name and number of the IRS publication or form/instruction where you found each answer, and the page number on which the answer is found. Use your own words in the answer – do not copy the IRS’ language.

Answer 1

1. MACRS cost recovery period for each type of asset specifically identified by the IRS in agriculture:

GDS cost recovery period  

ASSET Recovery period (years)

Agricultural structures(single purpose) 10

Automobiles 5

Calculators and copiers 5

Cattle(dairy or breeding) 5

Communication equipment(Note 1) 7

Computer and peripheral equipment 5

Drainage facilities 15

Farm buildings(Note 2) 20

Farm Machinery and equipment 7

Fences ( agriculture) 7

Goats and sheep(breeding) 5

Grain bin 7

Hogs(Breeding) 3

Horses ( age when placed in service)

Breeding and working (12years or less) 7

Breeding and working ( more than 12 years) 3

Racing horses 3

Horticultura structures (single purpose) 10

Logging machinery and equipment (Note 3) 5

Non residential real property 39(note4)

Office Furniture, Fixtures and equipment(Other than copiers, calculators) 7

Paved lots 15

Residential rental property 27.5

Tractor units(over the road) 3

Trees or vines bearing fruits or nuts 10

Truck( heavy duty, unloaded weight 13000lbs or more) 5

Truck(actual weight less than 13000 lbs) 5

Water wells 15

NOTE 1:- Not including communication equipment listed in other classes

NOTE 2:- Not including single purpose agricultural or horticultural structures

NOTE 3:- Used by logging and sawmill operators for cutting of timber

NOTE 4:- For property placed in service after MAY 12, 1993; for property placed in service before MAY 12, 1993 recovery period is 31.5 years.

2. MACRS cost recovery period for each type of asset specifically identified by the IRS in railroad transportation

GDS cost recovery period

ASSET Recovery period (years)

Light and heavy general purpose trucks and cars 5

Automobiles, Taxis and buses 5

Trailers and trailer mounted containers 5

Airplanes and helicopters not used for commercial or contract

carrying of passengers or frieght 5

Railroad cars and locomotives not owned by railroad transportation

companies 7

Tractor units for use over the road 3

3.(A) MACRS cost recovery period for each type of asset specifically identified by the IRS in agriculture:

ADS cost recovery period  

ASSET Recovery period (years)

Agricultural structures(single purpose) 15

Automobiles 5

Calculators and copiers 6

Cattle(dairy or breeding) 7

Communication equipment(Note 1) 10

Computer and peripheral equipment 5

Drainage facilities 20

Farm buildings(Note 2) 25

Farm Machinery and equipment 10

Fences ( agriculture) 10

Goats and sheep(breeding) 5

Grain bin 10

Hogs(Breeding) 3

Horses ( age when placed in service)

Breeding and working (12years or less) 10

Breeding and working ( more than 12 years) 10

Racing horses 12

Horticultura structures (single purpose) 15

Logging machinery and equipment (Note 3) 6

Non residential real property 40

Office Furniture, Fixtures and equipment(Other than copiers, calculators) 10

Paved lots 7

Residential rental property 40

Tractor units(over the road) 4

Trees or vines bearing fruits or nuts 20

Truck( heavy duty, unloaded weight 13000lbs or more) 6

Truck(actual weight less than 13000 lbs) 5

Water wells 20

NOTE 1:- Not including communication equipment listed in other classes

NOTE 2:- Not including single purpose agricultural or horticultural structures

NOTE 3:- Used by logging and sawmill operators for cutting of timber

3.(B) MACRS cost recovery period for each type of asset specifically identified by the IRS in railroad transportation

ADS cost recovery period

ASSET Recovery period (years)

Light general purpose trucks and cars 5

Heavy general purpose trucks and cars 5

Automobiles, Taxis 5

Buses 9

Trailers and trailer mounted containers 6

Airplanes and helicopters not used for commercial or contract

carrying of passengers or frieght 6

Railroad cars and locomotives not owned by railroad transportation

companies 15

Tractor units for use over the road 4