Question

what are the recovery periods under the modified accelerated cost recovery system

Answer 1

Modified Accelerated Cost Recovery System (MACRS)

This is a system used by the US tax authority to determine and allow the depreciation of capital Assets to any given Firm/Organisation.

Recovery Periods are the term or the number of years allowable for each class of Assets to recover the cost. In other words, this is the useful life of the Asset determined as per the US tax authorities i.e., the Internal Revenue Services (IRS). Meaning, for the purpose of computation of depreciation allowable for Tax purposes,we use the Recovery period determined as per the US tax regime.

The IRS publishes the useful lives of various classes of assets. This information is used to compute the depreciation for a given type of qualified asset. Few examples of some assets and their useful lives in years as published by the IRS include:

ASSETS AND USEFUL LIFE IN YEARS
Description of Assets	Useful Life (Years)
Tractors, racehorses, rent-to-own property, etc.	3
Automobiles, buses, trucks, computers, office machinery, breeding cattle, furniture, etc.	5
Office furniture, fixtures, agricultural machinery, railroad track, etc.	7
Vessels, tugs, agricultural structure, tree or vine bearing fruits or nuts, etc.	10
Municipal waste water treatment plant, restaurant property, natural gas distribution line, land improvements, such as shrubbery, fences, and sidewalks, etc.	15
Farm buildings, certain municipal sewers, etc.	20
Water utility property, certain municipal sewers, etc.	25
Any building or structure where 80% or more of its gross rental income is from dwelling units	27.5
An office building, store, or warehouse that is not residential property or has a class life of less than 27.5 years	39

Some details for the Answer have been acquired from the IRS website from the Publication 946 (2018), How To Depreciate Property