The MACRS Concept of "Class Life"

In 1971 a special multiple- asset depreciation procedure for personalty known as the Asset Depreciation Range (ADR) system was introduced. Such a system grouped similar assets by year of purchase into "vintage accounts." The asset(s) would then be depreciated over a "range" of acceptable years. This range included useful lives up to 20% less or 20% more than special guideline lives for different assets that were originally published by the IRS in Rev. Proc. 62-21, 1962-2 C.B. 418. For example, office furniture originally had a guideline life of 10 years, but under the ADR procedure, a taxpayer could choose any recovery period between 8 and 12 years (i.e., up to 20% less or 20% more than the guideline life).

The ADR system was replaced by the ACRS method for properties placed into service after 1980; however, the ADR midpoint lives were used as the starting point for developing categories of depreciable personalty under ACRS (and later MACRS). These original "midpoint lives" were renamed "class lives" under MACRS and were modified by Rev. Procs. 87-56 and 88-22. Thus, the "class life" of office furniture is now 10 years (the old ADR midpoint life). The complete table of class lives is accessible in the Explanations data base by retrieving Rev. Proc. 87-56. An extract from that table is shown on the following screen. The notation "general depreciation system" refers to the MACRS recovery life; the alternative depreciation system is discussed in the next section.