Engineering Economic Analysis

Once the MACRS property class is known, as well as the placed-in-service date and

cost basis, the year-to-year depreciation deductions can be calculated for GDS assets over

their depreciable life using

dt=Bxrt (11-5)

wheredt=depreciation deduction in yeart

B=cost basis being depreciated

rt=appropriate MACRS percentage rate

Percentage Tables

The IRS has prepared tables to assist in calculating depreciation charges when MACRS I

~

i

GDS depreciation is used. Table 11-3 gives the yearly depreciation percentages (rt)that fife :

used for the six personal property classes (3-, 5-, 7-, 10-, 15-,and 20-year property classes), :

and Table 11-4 gives the percentages for nonresidential real property. Notice that the values I~

are given inpercentages-thus, for example, the value of 33.33% (given in Table 11-3 for J

Year 1 for a 3-year MACRS GDS property) is 0.3333.

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r

Modified Accelerated Cost Recovery System (MACRS)^349

TABLE11-1 Example Class Lives and MACRSProperty Classes

MACRSProperty

IRSAsset Class Life (years)

Class (years)

Class Asset Description ADR GDS ADS

00.11 Office furniture, fixtures, and equipment 10 7 10

00.12 Information systems: computers/peripheral 6 5 6

00.22 Automobiles, taxis 3 5 6

00.241 Light general-purpose trucks^456

00.25 Railroad cars and locomotives^15715

00.40 Industrial steam and electric distribution 22 I 15 22

01.11 Cotton gin assets 10 7 10

01.21 Cattle, breeding or dairy 7 5 7

13.00 Offshore drilling assets 7.5 5 7.5

13.30 Petroleum refining assets 16 10 16

15.00 Construction assets 6 5 6

20.10 Manufacture of grain and grain mill products 17 10 17

20.20 Manufacture of yarn, thread, and woven fabric^11711

24.10 Cutting of timber (^65) I 6
32.20 Manufacture of cement 20 15 20
20.1 Manufacture of motor vehicles 12 7 12
48.10 Telephone distribution plant^24 I^15 I^24
48.2 Radio and television broadcasting equipment^656
49.12 Electric utility nuclear production plant 20 15 20
49.13 Electric utility steam production plant 28 120 28
49.23 Natural gas production plant (^147) I 14
50.00 Municipal wastewater treatment plant 24 15 24
80.00 Theme and amusement park assets 12.5^7 12.5