In your studies this week, you learned about cost recovery using the Modified Accelerated Cost Recovery System (MACRS) provided by the IRS, which businesses must use to report depreciation on their long-term assets for tax purposes. This is in contrast to the choices that companies have for depreciating assets for external financial reporting purposes, also known as book depreciation.

For your initial post,

• Select an industry or business where you currently work or hope to work in the future.
• Identify and describe at least five long-term assets that would be common for a business in that industry.
  • Reference Revenue Procedure 87-56, which was issued shortly after the Tax Reform Act of 1986 and established MACRS: Revenue Procedure 87-56Links to an external site..
  • Note, also reference the MACRS Asset Life TableLinks to an external site..
• Provide the class life in years (recovery period), general depreciation system, and alternative depreciation system for each asset based on the guidance in Revenue Procedure 87-56.
• Explain how you determined which category each asset would fall into. If one of your assets was not specifically mentioned in Revenue Procedure 87-56, explain the factors that you considered in determining the appropriate classification.