MACRS Recovery Periods and Classification
How property is placed in a MACRS class: check the asset classes used in all businesses, then the activity classes, then the statutory defaults. Class lives come from Rev. Proc. 87-56 as reproduced in Publication 946, Appendix B. Educational information, not tax advice.
Educational information, not tax advice.
Updated 2026-10-14
Key takeaways
- Asset classes 00.11–00.4 apply in all businesses; activity classes 01.1–80.0 depend on the business.
- An asset described in both goes in the asset class unless specifically excluded from it or specifically included in the activity class.
- Personal property with no class life defaults to 7 years.
- Residential rental property is 27.5 years; nonresidential real property is 39 years; QIP is 15-year straight line.
- Classification is judgment-heavy. A study should state the class and why.
MACRS recovery periods follow class lives under §168(e). The class lives come from Rev. Proc. 87-56, reproduced in Publication 946, Appendix B. There are two kinds: asset classes (00.11 through 00.4), which describe types of assets used in any business, and activity classes (01.1 through 80.0), which describe assets used in a particular activity.
Section 168(e)(1) maps class life to recovery period: 4 years or less is 3-year property; more than 4 but less than 10 is 5-year; 10 or more but less than 16 is 7-year; 16 or more but less than 20 is 10-year; 20 or more but less than 25 is 15-year; 25 or more is 20-year. Property that has no class life and is not otherwise classified is 7-year property under §168(e)(3)(C).
In Rev. Rul. 2003-81, the IRS explained the order: an asset described in both an asset class and an activity class goes in the asset class, unless it is specifically excluded from the asset class or specifically included in the activity class. The ruling cites Norwest Corp., 111 T.C. 105 (1998), for that description of Rev. Proc. 87-56.
Statutory classes override the table when Congress assigned a period. Residential rental property is 27.5 years. Nonresidential real property is 39 years. Qualified improvement property is 15-year property using straight line. Those assignments are in §168(c) and §168(e), not in Appendix B.
This page is educational information, not tax advice. Classification often involves judgment, especially for mixed activities. A study should state the class used for each component and why. Super Intelligence is proposed documentation support, not an operational classifier.
Common classes in cost segregation
Publication 946 and the Appendix B tables are the source for the following commonly cited classes. 00.11 office furniture, fixtures, and equipment: 7-year GDS. 00.12 information systems: 5-year. 00.3 land improvements: class life 20, GDS 15, ADS 20. Residential rental property: 27.5 years. Nonresidential real property: 39 years.
Activity class 57.0 (distributive trades and services) is widely used for personal property in wholesale, retail, and personal or professional services. Research treated its GDS period as 5 years, consistent with a class life over 4 and under 10, but the PDF table extraction was garbled. Confirm the row in Publication 946 Table B-2. Class 57.1 (billboards, service station buildings, and petroleum marketing land improvements) appears as 15-year GDS in the same table, subject to the same visual check.
Class 00.3 covers sidewalks, roads, drainage, fences, landscaping, and similar improvements made directly to land. It excludes buildings and structural components as defined in Treas. Reg. §1.48-1(e). Putting a wall in 00.3 because it sits on land is a misread of the class.
Activity class overrides
Some activity classes include land improvements. Publication 946 gives the example of a paper manufacturer whose land improvements fall in its activity class rather than 00.3. The activity class life then controls the recovery period.
A lessor generally classifies leased property by the lessee’s activity under the class-life regulations. The landlord of a store does not automatically use class 57.0 for every item; the analysis follows the lessee’s use and the asset-versus-activity order.
Businesses with mixed activities need a documented assignment. A property that is part hotel and part apartment is first a residential-versus-nonresidential question under §168(e)(2), then an activity-class question for the personal property in each part.
What the class does not decide
A class life does not decide whether an item is a structural component. Treas. Reg. §1.48-1 and the case law decide that. Only after an item is personal property or a land improvement does Appendix B assign the period.
Courts have split on the same asset type depending on facts. An item is not 5-year property merely because a matrix or a prior case listed a similar name. Present outcomes as fact-specific examples.
ADS, bonus eligibility, and §179 are separate questions. A 5-year class is generally within the 20-year bonus ceiling, as of October 16, 2026, but ADS-required property is still excluded from bonus. See the bonus-eligibility page.
Professional judgment
The original 1987 Cumulative Bulletin text of Rev. Proc. 87-56 was not found on irs.gov during this research. Publication 946 Appendix B is the IRS’s current reproduction. Where the PDF table is unclear, do not guess a number.
A quality study cites the class, the class life, and the reason the item is in that class rather than the building. A list of recovery periods without reasons is not a classification analysis.
Your CPA applies the classes on Form 4562. The study’s job is to support those lines, not to file them.
Sources
- 1IRS Publication 946 — How To Depreciate Property (2025)(opens in a new tab)
Appendix B reproduces the Rev. Proc. 87-56 class lives.
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