Rev. Proc. 87-56 is the IRS’s master class-life table — the administrative implementation of the directive in IRC §168(i)(1) that the Treasury maintain a table assigning class lives to asset categories. Every MACRS recovery period in the country, every cost segregation study, every Form 3115 method change for accelerated depreciation traces back to a category in this table.
It was issued in 1987 to replace the prior Asset Depreciation Range (ADR) system class-life table and remains operative today, periodically supplemented by subsequent Revenue Procedures as new industries are added. Its 147 asset categories are the operational source of truth that Pub. 946 Appendix B carries forward and that examiners use to evaluate component classifications in a cost segregation study.
What it says
”This revenue procedure sets forth the class lives of property that are necessary to compute the depreciation allowances available under section 168 of the Internal Revenue Code of 1986, as amended by the Tax Reform Act of 1986.”
The procedure is divided into two parts. Part A enumerates general asset categories that apply across industries — office furniture (Asset Class 00.11, class life 10 years, GDS 7), information systems (00.12, class life 6 years, GDS 5), automobiles (00.22, class life 3 years, GDS 5), light general-purpose trucks (00.241), and the cost-segregation workhorse Asset Class 00.3, land improvements (class life 20 years, GDS 15).
”Includes improvements directly to or added to land, whether such improvements are section 1245 property or section 1250 property, provided such improvements are depreciable. Examples of such assets might include sidewalks, roads, canals, waterways, drainage facilities, sewers (not including municipal sewers in Class 51), wharves and docks, bridges, fences, landscaping shrubbery, or radio and television transmitting towers.”
This single asset class — 00.3 — is the single most cited Rev. Proc. 87-56 category in cost segregation studies. The 15-year GDS recovery period for land improvements drives a substantial portion of typical reclassification on properties with material site work.
”Includes assets used in wholesale and retail trade, and personal and professional services. Includes section 1245 assets used in marketing petroleum and petroleum products. Class life 9 years; GDS recovery period 5 years; ADS recovery period 9 years.”
Asset Class 57.0 is the umbrella category for distributive-trade and service-industry §1245 assets. It is the basis for the 5-year reclassification of qualifying interior fixtures, decorative lighting, and removable improvements in retail, restaurant, hotel, and professional-services properties.
Part B contains industry-specific categories — Asset Class 01 (agriculture), 10 (mining), 13 (construction), 20 (manufacture of food and beverages), 30 (manufacture of rubber products), 48 (telephone and telegraph), 49 (electric, gas, water, and steam, utility services), and 80 (theme and amusement parks). A cost segregation study cites the most specific applicable industry class for the property under analysis.
How it operates
A cost segregation study uses Rev. Proc. 87-56 in three operations:
- Asset identification. Each component identified in the engineering walkthrough or document review is matched to the most specific applicable asset class in the table.
- Class-life lookup. The class life, GDS recovery period, and ADS recovery period for that class are read from the table.
- Recovery-period assignment. The GDS recovery period is the figure entered on Form 4562 (or Form 3115 §481(a) computation, on a catch-up filing). The ADS period is used only if the property is subject to an ADS election or mandatory ADS classification under §168(g).
The procedure carries through subsequent updates (Rev. Proc. 88-22 added qualified opportunity zone property guidance, Rev. Proc. 96-25 added cellular telephones, etc.); the core 147-category framework is unchanged.
Cross-references
- IRC §168 — Accelerated Cost Recovery System (statutory authority — see §168(i)(1))
- MACRS topic hub (practitioner-facing framework)
- Cost segregation topic hub (the application that drives Rev. Proc. 87-56 lookups)
- Pub. 946 — How to Depreciate Property (Appendix B carries the table forward)
- Class life glossary entry
Sources
- IRS PDF: www.irs.gov/pub/irs-tege/rp-87-56.pdf
- Citation: Rev. Proc. 87-56, 1987-2 C.B. 674
- Statutory authority: 26 U.S.C. § 168(i)(1)
- IRS plain-English carry-forward: Pub. 946, Appendix B