Question

For each of the tangible business assets listed below, match the appropriate MACRS recovery period.

Office Building:
a) 39 years
b) 27.5 years
c) 20 years
Apartment Building:
a) 27.5 years
b) 20 years
μnicipal Sewer System:
a) 39 years
b) 20 years

Answer 1

The recovery periods for MACRS for the assets listed are: Office Building - 39 years, Apartment Building - 27.5 years, and Municipal Sewer System - 20 years. These are determined by the asset type as specified in tax regulations.

Step-by-step explanation:

For each tangible business asset mentioned, the Modified Accelerated Cost Recovery System (MACRS) recovery period assigns a specific duration over which the property may be depreciated for tax purposes. The appropriate MACRS recovery periods for the assets given are:

• Office Building: a) 39 years
• Apartment Building: a) 27.5 years
• Münicipal Sewer System: b) 20 years

The recovery periods are determined based on the type of property and are specified in the Internal Revenue Code and related regulations. Office buildings fall under non-residential real property, hence the 39-year recovery period. Apartment buildings are considered residential rental property and are thus categorized under the 27.5-year recovery period. Municipal sewer systems are part of a special category of property that is typically given a 20-year recovery period.