Under the MACRS depreciation system, what is the applicable class life for a tractor?
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Under the MACRS (Modified Accelerated Cost Recovery System) depreciation system, the applicable class life for a tractor is determined by referencing the IRS asset classification tables, specifically those set forth in Rev. Proc. 87-56 and as reflected in IRS Publication 946 and Publication 225.
For tractors, which are considered farm machinery and equipment, the relevant asset class is found in the MACRS tables:
- Asset Class 01.1 (Agriculture): This class includes machinery and equipment used in the production of crops or plants, vines, and trees, as well as livestock, and the operation of farm dairies, nurseries, greenhouses, sod farms, mushroom cellars, cranberry bogs, apiaries, and fur farms. For most farm machinery and equipment (including tractors) placed in service after 2017, the GDS (MACRS) recovery period is 5 years. However, the class life for such equipment is 10 years under Table B-2 of Rev. Proc. 87-56 and IRS Publication 946.
- Asset Class 01.1 (from Table B-2):
- Description: Agriculture—includes machinery and equipment, grain bins, and fences but no other land improvements, that are used in the production of crops or plants, vines, and trees; livestock; etc.
- Class Life: 10 years
- GDS (MACRS) Recovery Period: 7 years (for property placed in service before 1989), but 5 years for machinery and equipment used in a farming business (other than any grain bin, cotton ginning asset, fence, or other land improvement) placed in service after 2017, in tax years ending after 2017.
- Asset Class 01.21 (Cattle, Breeding or Dairy): 7 years class life, but this is for livestock, not tractors.
- Asset Class 00.26 (Tractor Units for Use Over-The-Road): 4 years class life, but this refers to over-the-road tractor units (e.g., for trucking), not farm tractors.
Summary:- Farm tractors are classified as farm machinery and equipment.- Applicable class life for a tractor under MACRS: 10 years.- GDS (MACRS) recovery period for tractors placed in service after 2017: 5 years.
Therefore, under MACRS, the applicable class life for a tractor is 10 years.
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