What is the Class Life or Recovery Period for a tractor under the MACRS depreciation system?
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Under the MACRS (Modified Accelerated Cost Recovery System) depreciation system, the class life and recovery period for a tractor depend on its use and classification as farm equipment.
1. Tractor Used in Farming (Farm Machinery and Equipment)
- Classification: Tractors used in farming are considered "farm machinery and equipment."
- MACRS Recovery Period: 7 years under the General Depreciation System (GDS).
- Class Life: 10 years.
- Statutory Reference:
- "5-year property" includes automobiles and light general purpose trucks.
- "7-year property" includes farm machinery and equipment (other than any grain bin, cotton ginning asset, fence, or other land improvement) used in a farming business, the original use of which commences with the taxpayer after December 31, 2017.
2. Tractor Not Used in Farming (e.g., Construction, Non-Farm Use)
- If the tractor is not used in a farming business, it may fall under a different asset class, such as "construction equipment" or "general purpose machinery," which may have a different recovery period. However, for most business uses, tractors are classified as 7-year property unless specifically listed otherwise in the MACRS tables.
3. Alternative Depreciation System (ADS)
- If required or elected, the tractor would be depreciated using the straight-line method over the 10-year class life under ADS.
4. Summary Table (from IRS and MACRS Guidance)
5. Supporting Authority
- IRS Publication 946, Table B-1 and B-2:
- "Machinery/equipment used in farming (placed in service after 2017, with specific conditions)" is 7-year property under GDS, 10-year under ADS.
- Internal Revenue Code §168(e):
- 7-year property includes property with a class life of 10 years or more but less than 16 years.
6. Practical Example
- If you purchase a tractor for use in your farming business, you would depreciate it over 7 years using MACRS GDS, or over 10 years using ADS if required or elected.
In summary: A tractor used in farming is classified as 7-year property under MACRS GDS (with a 10-year class life), and 10-year property under ADS.
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