Class Life — Glossary — IRS Depreciation Rules

Class Life

The midpoint useful life assigned to an asset under the Asset Depreciation Range (ADR) system, codified for current law in Rev. Proc. 87-56. Each property's class life determines its MACRS recovery period under both GDS and ADS — it is the conceptual root of every depreciation schedule.

STATUTE BASIS · IRC §168(i)(1) · Rev. Proc. 87-56

In context

Class life is not the recovery period itself. It is the underlying midpoint life from which the recovery period is derived. A 7-year asset under GDS (the default Modified Accelerated Cost Recovery System) typically has a class life between 10 and 16 years; a 5-year asset has a class life between 4 and 10 years; a 15-year land improvement has a class life of 20 years.

Rev. Proc. 87-56 enumerates 147 asset categories — agricultural machinery, retail trade fixtures, water transportation, telecommunications, gas utility distribution, and so on — and assigns each a class life, a GDS recovery period, and an ADS recovery period. Cost segregation studies refer to this table when assigning component recovery periods.

See MACRS for the umbrella framework and recovery period for the derived statutory life.