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Formula-based Depreciation
Prepared by
Special thanks to these individuals for their input into this document:
Name Position
Change Record
Contributors ........................................................................................................................................................................ 3
Change Record.................................................................................................................................................................... 3
Overview ............................................................................................................................................................................... 6
A Global Perspective............................................................................................................................................................. 7
U.S. Revenue Codes -- Modified Accelerated Cost Recovery System.................................................................................... 7
Sum-of-the-Years’-Digits .................................................................................................................................................. 14
Japan................................................................................................................................................................................. 15
Portugal ............................................................................................................................................................................ 15
Constant Quotas ............................................................................................................................................................ 15
Digressive Quotas.......................................................................................................................................................... 15
A Technical Perspective........................................................................................................................................................ 1
Variables and Functions ...................................................................................................................................................... 1
Life ................................................................................................................................................................................. 1
Salvage Value ................................................................................................................................................................. 1
Remaining Life 1............................................................................................................................................................. 1
Remaining Life 2............................................................................................................................................................. 2
Production Capacity ........................................................................................................................................................ 3
Short Year....................................................................................................................................................................... 3
GREATEST .................................................................................................................................................................... 3
LEAST............................................................................................................................................................................ 3
DECODE ........................................................................................................................................................................ 4
POWER .......................................................................................................................................................................... 4
SQRT.............................................................................................................................................................................. 4
ROUND .......................................................................................................................................................................... 4
SIGN............................................................................................................................................................................... 4
Data Schema ....................................................................................................................................................................... 4
FA_FORMULAS ................................................................................................................................................................ 4
Rate Adjustment Factor....................................................................................................................................................... 5
Formula Factor.................................................................................................................................................................... 5
Diagnostics........................................................................................................................................................................... 12
In the U.S., some commonly used tax depreciation methods are ACRS and
MACRS methods. ACRS (Accelerated Cost Recovery System) was a by-product
of the Economic Recovery Tax Act of 1981. With this depreciation method,
capital investments are stimulated due to faster write-offs. This method applies to
assets purchased in the years 1981 through 1986. MACRS (Modified Accelerated
Cost Recovery System) was enacted by Congress in the Tax Reform Act of 1986.
It applies to capitalized assets placed in service in 1987 and later.
The calculation of depreciation under MACRS differs from that under GAAP in
three aspects: (1) a mandated tax life, which is generally shorter than the economic
life; (2) cost recovery on an accelerated basis; and (3) an assigned salvage value of
zero.1 Tax rules on depreciation tend to change every year.
The depreciation expenses is computed based on the tax basis, usually the cost, of
the asset. The depreciation method depends on the life of the assets as mandated
by the MACRS property class. For example, 3-, 5-, 7- and 10-year property
employ double-declining-balance method. (Refer to the Appendix for MACRS
property classes.) When a declining balance or accelerated metho is used, a switch
is made to the straight-line method in the first year in which straight-line
depreciation exceeds the accelerated depreciation. Depreciation computations for
income tax purposes are based on the half-year convention. An asset is
depreciated to zero salvage value at then end of the MACRS life.
IRS provides rate tables for you to compute depreciation of MACRS properties.
Oracle Assets make these tables available for you to meet IRS’ requirements on
MACRS depreciation. However, IRS disallows the use of the MACRS rate tables
in a short tax year. A short tax year is any tax year with less than 12 months. This
can be a result of a merger or acquisition, the first year or last year of a company’s
Figure 1: Defining a formula for MACRS depreciation in the Depreciation Formula Screen
Table 1: MACRS depreciation calculations on a 7-year property with a Half Year prorate convention using Formula-
based Depreciation
Compare the above results with calculations using MACRS tables and a cost basis,
you will discover that the annual depreciation expenses are identical.
Year Cost Rate Depreciation
1 10000 0.14286 1428.60
2 10000 0.2449 2449.00
3 10000 0.17492 1749.20
4 10000 0.12495 1249.50
5 10000 0.08925 892.50
6 10000 0.08925 892.50
7 10000 0.08925 892.50
8 10000 0.04462 446.20
Table 2: MACRS depreciation calculations on a 7-year property with a Half Year prorate convention using rate tables
2 Basis is a way of measuring your investment in assets for tax purposes. You use the basis of assets to calculate deductions for
depreciation, amortization, depletion and casualty losses. Oracle Assets allows you to use either Cost or Net Book Value as the
basis.
After defining your formula, you can test if it returns a desired depreciation rate.
You do so in Test Formula tabbed region of the Depreciation Formula screen. In
the above example on MACRS depreciation, in the 5th year of the 7-year asset life,
Remaining Life 1 is 3.5 years. Enter these values as illustrated in Figure 2 and
click on the ‘Calculate’ button. The Resulting Depreciation Rate is 0.285714257
and agrees with the result in Table 2.
Similar to the Double-Declining method, you can consider employing the following
formula on a 150% declining balance deduction:
The deductions on a 15-year property using the 150% declining balance method
are as follows:
Year Cost NBV Remaining 1.5/Life 1/Remaining Life Depreciation Reserve
Life
1 10000 10000.00 15 0.1 0.066667 500.00 500.00
2 10000 9500.00 14.5 0.1 0.068966 950.00 1450.00
3 10000 8550.00 13.5 0.1 0.074074 855.00 2305.00
4 10000 7695.00 12.5 0.1 0.08 769.50 3074.50
5 10000 6925.50 11.5 0.1 0.086957 692.55 3767.05
6 10000 6232.95 10.5 0.1 0.095238 623.30 4390.35
7 10000 5609.66 9.5 0.1 0.105263 590.49 4980.84
8 10000 5019.17 8.5 0.1 0.117647 590.49 5571.33
9 10000 4428.68 7.5 0.1 0.133333 590.49 6161.82
10 10000 3838.19 6.5 0.1 0.153846 590.49 6752.31
11 10000 3247.70 5.5 0.1 0.181818 590.49 7342.80
12 10000 2657.21 4.5 0.1 0.222222 590.49 7933.29
IRS stated that figuring out depreciation without rate tables can arrive at slightly
different results. These differences are likely caused by rounding.
Table 5 exhibits the depreciation rates of 150 double declining method that can be
applied to 15-year assets placed in service at different times of the year. There are
in total 196 rates. With formula-based depreciation, however, you only need to
define one simple formula to handle your needs.
Year/ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Period
1 0.1 0.09 0.081 0.0729 0.06561 0.05905 0.05905 0.05905 0.05905 0.05904 0.05905 0.05905 0.05905 0.05905 0.05905 0
2 0.09167 0.09083 0.08175 0.07358 0.06621 0.0596 0.05905 0.05905 0.05905 0.05904 0.05905 0.05905 0.05905 0.05905 0.05905 0.00492
3 0.08333 0.09167 0.0825 0.07425 0.06683 0.06014 0.05905 0.05905 0.05904 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.00984
4 0.075 0.0925 0.08325 0.07493 0.06743 0.06069 0.05905 0.05904 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.01476
5 0.06667 0.09333 0.084 0.0756 0.06804 0.06124 0.05905 0.05904 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.01968
6 0.05833 0.09417 0.08475 0.07628 0.06864 0.06179 0.05904 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.0246
7 0.05 0.095 0.0855 0.07695 0.06926 0.06232 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.02952
8 0.04167 0.09583 0.08625 0.07763 0.06986 0.06287 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05904 0.03445
9 0.03333 0.09667 0.087 0.0783 0.07047 0.06342 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05904 0.05905 0.03937
10 0.025 0.0975 0.08775 0.07898 0.07107 0.06397 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05904 0.05905 0.04429
11 0.01667 0.09833 0.0885 0.07965 0.07169 0.06451 0.05905 0.05905 0.05905 0.05905 0.05905 0.05905 0.05904 0.05905 0.05905 0.04921
12 0.00833 0.09917 0.08925 0.08033 0.07229 0.06506 0.05905 0.05905 0.05905 0.05905 0.05905 0.05904 0.05905 0.05905 0.05905 0.05413
Sum-of-the-Years’-Digits
Oracle Assets provides you with rate tables necessary for the computation of sum-
of-the-years’-digits depreciation. The following example illustrates the calculation
on a 5-year asset placed in service in the first period of the year:
Year Cost Depreciation Accumulated Rate
Expense Depreciation
1 450000 149998.50 149998.50 0.33333
2 450000 120001.50 270000.00 0.26667
3 450000 90000.00 360000.00 0.2
4 450000 59998.50 419998.50 0.13333
5 450000 30001.50 450000.00 0.06667
450000.00
Using the above formula to depreciate a 5-year assets with cost as the depreciable
basis, the resulting deductions are similar to those from a table-based method. The
discrepancies in the depreciation expenses are due to rounding. Table 7 shows the
annual depreciation expenses using the formula method.
Year Life Remaining Cost Depreciation Rate
Life Expense
where m denotes the remaining useful life and n is the estimated asset life.
Japan
Setting up a net book value based formulaic depreciation with a formula of 0.438
can help you arrive at the same results.
Portugal
Constant Quotas
Constant Quotas Method is supported in Oracle Assets by Calculated (STL) or
Flat Rate depreciation methods.
Digressive Quotas
Under Digressive Quotas Method, annual depreciation is calculated according to a
sum of the year’s digits formula, as follows :
where RC = recoverable cost, i = year of life and n = total life in years. When the
annual depreciation value becomes less than the division of the remaining
depreciation value by the remaining expected life (since the beginning of that FY),
the depreciation value will be the quotient of that division for the remaining years
(becomes a constant value).
Telecommunications Industry
1 1
PeriodicDepreciationExpense = AdjustedCost × ×
AssetLife NumberOfPeriodsPerYe
...Formula 9
The Adjusted Cost is the same as the recoverable cost which is equal to ‘cost less
salvage value’. This Adjusted Cost remains constant throughout the entire life of
the asset until a cost adjustment or revaluation is made.
1/ <Remaining_Life_1> ...Formula 10
With this formula, the system takes the Net Book Value at the beginning of the
Fiscal Year to be the depreciable basis for that Fiscal Year. The asset deductions
for a 5-year property are as follows:
Comparing the above results to the cost-based straight-line method below, you
would notice that the annual deductions are the same across both methods.
One advantage of using the Formula-based straight-line method over the standard
one is that you can choose when to start allocating the depreciation expense in the
first year of the asset life. When setting up your prorate convention for your
straight-line assets, take the option of ‘Depreciation when placed in service’. By
doing that, you start allocating depreciation expense in the period the asset is
placed in service in case the prorate date falls in a different period. The calculation
presented in Table 10 shows the different ways you could allocate deductions in
the first year of an asset life. In this example, an asset is placed in service in April
in a January to December calendar. The prorate convention is half year. In Case 1,
the asset starts depreciating in the prorate period. In contrast, in case 2, the
system starts allocating depreciation expenses in April when it is placed in service.
Notice that the annual depreciation amount turns out to be the same in both cases.
After making improvements to your assets, you adjust the basis to reflect the true
value of your assets. In certain occasions, you may need to back date these
adjustments without affecting the overall impact on the annual depreciation
expenses. In the example given below, you can clearly see how formula-based
depreciation helps you achieve this. You placed in service an asset in Apr, 1998
using a half year prorate convention, and formula-based straight-line over
remaining life method (Formula 10). The asset started depreciating in July, 1998.
In May of the following year, you adjusted the cost from 12,000 to 18,000 and
back dated this adjustment to the start of the year, ie Jan, 1999. In another
scenario, instead of adjusting the cost in May, you performed the transaction in
June. Notice that the resulting annual depreciation amounts in both cases are
identical. The subsequent year’s depreciation expenses are the same, too.
Jul 12000 12000 200 200 0.2 11800 1 1 12000 12000 200 200 0.2 11800 1 1
Aug 12000 12000 200 400 0.2 11600 1 1 12000 12000 200 400 0.2 11600 1 1
Sep 12000 12000 200 600 0.2 11400 1 1 12000 12000 200 600 0.2 11400 1 1
Oct 12000 12000 200 800 0.2 11200 1 1 12000 12000 200 800 0.2 11200 1 1
Nov 12000 12000 200 1000 0.2 11000 1 1 12000 12000 200 1000 0.2 11000 1 1
Dec 12000 12000 200 1200 0.2 10800 1 1 12000 12000 200 1200 0.2 10800 1 1
1200 1200
Jan 12000 10800 200 1400 0.22 10600 1 1 12000 10800 200 1400 0.22 10600 1 1
Feb 12000 10800 200 1600 0.22 10400 1 1 12000 10800 200 1600 0.22 10400 1 1
Mar 12000 10800 200 1800 0.22 10200 1 1 12000 10800 200 1800 0.22 10200 1 1
Apr 12000 10800 200 2000 0.22 10000 1 1 12000 10800 200 2000 0.22 10000 1 1
May 14000 12000 240 2240 0.22 11760 0.833 0.9 12000 10800 200 2200 0.22 9800 1 1
Jun 14000 12000 240 2480 0.22 11520 0.83 0.9 14000 11800 220.5996 2420.6 0.22 11579.4 0.875 0.883333
Jul 14000 12000 240 2720 0.22 11280 0.83 0.9 14000 11800 220.5996 2641.199 0.22 11358.8 0.875 0.883333
Aug 14000 12000 240 2960 0.22 11040 0.83 0.9 14000 11800 220.5996 2861.799 0.22 11138.2 0.875 0.883333
Sep 14000 12000 240 3200 0.22 10800 0.83 0.9 14000 11800 220.5996 3082.399 0.22 10917.6 0.875 0.883333
Oct 14000 12000 240 3440 0.22 10560 0.83 0.9 14000 11800 220.5996 3302.998 0.22 10697 0.875 0.883333
Nov 14000 12000 240 3680 0.22 10320 0.83 0.9 14000 11800 220.5996 3523.598 0.22 10476.4 0.875 0.883333
Dec 14000 12000 240 3920 0.22 10080 0.83 0.9 14000 11800 220.5996 3744.198 0.22 10255.8 0.875 0.883333
2720 2720
Jan 14000 10080 300 4220 0.4 9780 0.83 0.744 14000 10255.8 280.9524 4025.15 0.4 9974.85 0.875 0.719105
048
Feb 14000 10080 300 4520 0.4 9480 0.83 0.744 14000 10255.8 280.9524 4306.102 0.4 9693.89 0.875 0.719105
048 8
Mar 14000 10080 300 4820 0.4 9180 0.83 0.744 14000 10255.8 280.9524 4587.055 0.4 9412.94 0.875 0.719105
048 5
Table 11: Comparing the impact of cost adjustments that occurred in different months of the same year
To help you derive your own formulas to handle specific needs in your
organization, we present the technical details on Formula here.
This section of the document describes in detail each variable you can use to build
a depreciation formula. The syntax of each function is also outlined here.
Life
‘Life’ is the useful life of an asset expressed in years.
Salvage Value
Salvage Value is the estimated amount that will be received at the time the asset is
sold or removed from service. It is the amount to which the asset must be written
down or depreciated during its useful life. The value of salvage value is stored in
FA_BOOKS.SALVAGE_VALUE.
Remaining Life 1
In a Short Tax Year context, Remaining_Life_1 is the remaining useful life of an
asset as of the conversion date or prorate date, whichever is later. In the former
case, remaining_life_1 can be interpreted as the number of years between the
conversion date and the end of asset life. If the asset is not added in a short tax
year, then Remaining_Life_1 is identical to Remaining_Life_2.
When Remaining_Life_1 is used on an asset that was not added in a short year,
then original depreication start date and conversion date become irrelevant:
Remaining Life 2
Remaining_Life_2 is the number of years between the first day of the current fiscal
year and the end of asset life.
Remaining_Life2 :=
FLOOR{MONTHS_BETWEEN(
ADD_MONTHS[orig_deprn_start_date, Life_In_Months],
<curr_fiscal_year_start_date >)
};
TO_CHAR LAST_UPDATE_DATE
------- ---------
2450532 24-MAR-97
The from and to dates in the five examples shown are respectively July and Apr;
you would expect the MONTHS_BETWEEN function to give the same result, ie
33 months. However, due to the algorithm of the derivation, the results clearly
show discrepancies.
In view of this, when Oracle Assets calculates the remaining life of an asset, it
converts conversion date and fiscal year start date to the first day of the month
before passing them to the MONTHS_BETWEEN function. This ensures that
remaining life stay constant for any given day of the month. As a result, in the five
examples show above would consistently give the result of 33 months.
Production Capacity
Production Capacity is stored in FA_BOOKS.PRODUCTION_CAPACITY.
Short Year
The Short Year flag has a value of 1 if the current year is a Short Tax Year.
Otherwise, the value is 0. This variable is only relevant to short tax year assets and
is meaningful when in used with the DECODE function.
The following describes the syntax and usage of functions available in formula-based
depreciation.
GREATEST
Syntax:: GREATEST ( expr1, expr2, expr3.... )
Returns the greatest value in a list of values. The expressions expr1, expr2, and so on can be a
number, formula variable or a mathematical expression that returns a number. For example,
Greatest ( 2/Life, Life, 0.4) returns 10 if Life has a value of 10.
LEAST
Syntax:: LEAST ( expr1, expr2, expr3.... )
DECODE
Syntax:: Decode (expr, search1, result1 [, search2, result2] ... [default])
The expression expr is compared to each search value. If expr equals a search value, the
corresponding result is returned. If no match is found, DECODE returns the default value, or
NULL if a default value was missing. In case a NULL value is returned by the DECODE
function, the resulting annual depreciation is zero.
POWER
Syntax:: POWER (expr1 , expr2 )
POWER returns the number expr1 raised to the power of expr2. Both expr1 and expr2 can be a
number or formula variable; but if expr1 is negative, then expr2 must be an integer.
SQRT
Syntax:: SQRT (expr1)
SQRT returns the square root of the number or variable expr1, which cannot be negative.
ROUND
Syntax:: ROUND ( expr1 [ , expr2])
Use the ROUND function to round the number or variable expr1 to expr2 decimal places. If you
do not supply expr2, expr1 is rounded to zero decimal places. The number expr2 can be
negative, in which case ROUND rounds the digits to the left of the decimal point.
SIGN
Syntax:: SIGN ( expr1 )
Data Schema
FA_FORMULAS
FORMULA_DISPLAYED is the formula that the user inputs into the Depreciation Formula
screen. When the user saves the record, the form converts <Life> into LIFE_IN_YEARS and
store it in FORMULA_ACTUAL. At the same time, the variable is translated to
NVL(LIFE_IN_MONTHS,0)/12. During actual calculation of depreciation, the depreciation
engine parses LIFE_IN_MONTHS and selects the value of life in months from FA_BOOKS.
The NVL function ensures that any null value be converted to zero in case the value zero exist in
the denominator in the formula.
FORMULA_ACTUAL
--------------------------------------------------------------------------------
FORMULA_DISPLAYED
--------------------------------------------------------------------------------
FORMULA_PARSED
--------------------------------------------------------------------------------
LIFE_IN_YEARS * 0.0145
<Life> * 0.0145
NVL(LIFE_IN_MONTHS,0) / 12 * 0.0145
where NewCost is the new adjusted cost and ReserveNewCost is the accumulated
depreciation in the current period had the Cost been the NewCost from the
beginning of the asset life. Refer to the section on Formula Factor for more
discussions on Rate Adjustment Factor.
Formula Factor
To account for the change in net book value at the time of adjustment and at the
turn of fiscal year, Oracle Assets introduced the formula factor. During a cost
adjustment, the adjusted cost is reset to:
Current Recoverable Cost is the new cost less salvage value. Reserve denotes the
reserve at the beginning of the period where amortization start date falls into.
From the period of adjustment onwards, the new adjusted cost is the basis of
depreciation.
If you choose to amortize the adjustment, the Rate Adjustment Factor is reset to
ensure that the difference between the old and new bases are allocated throughout
the remaining useful life of the asset. In the case where the depreciable basis is Net
Book Value, the formula factor is set to a non-zero value to account for the
change in net book value:
ReserveNewCost is equal to the Reserve based on the New Cost at the beginning of
the period where the amortization start date falls into. The New Cost is the New
Recoverable Cost. The resulting periodic depreciation amount becomes:
1 1
PeriodicDepreciation = AdjustedCost × Rate × × FF ×
RAF NumberofPeriodsPerYear
...Formula 14
Since the basis adjusted at the end of the fiscal year for an NBV based
depreciation, the Formula Factor is reset accordingly:
1 1
FormulaFactor = AdjustedCost adj × NBV fy × ×
Current Re cov erableCost NBVcurrent
...Formula 15
Adjusted Costadj is the adjusted cost at the time of adjustment. NBVfy denotes the
Net Book Value at the beginning of the Fiscal Year based on the New Cost had
there been no adjustment at all. Current Recoverable Cost is the Current Cost
less salvage value. NBVcurrent is Current Recoverable Cost less reserve.
1 6months
AnnualDepreciation = AdjustedCost * Rate * * FF * ...Formula 16
RAF 12months
1 1 6months
AnnualDepreciation = 12000 * * *1* = 1200 ...Formula 17
60 1 12months
At the end of year 98, the reserve is 1200 and the net book value is 10800. At the
beginning of 1999, the adjusted cost is set to the net book value, 10800, since this
is an NBV based deduction. The Remaining Life is also re-calculated at the turn of
the fiscal year to 54. The resulting annual depreciation rate is 1/54. Therefore, in
Jan-99, the deduction is:
1 1 1month
AnnualDepreciation = 10800 * * *1 * = 200 ...Formula 18
54 1 12months
In May-99, the cost of the asset is adjusted to 18000. Since the amortization is
backdated to Jan-99, the new adjusted cost is taken to be Cost less Reserve at the
beginning of Jan-99, ie, 18000-1200 = 16800. Rate adjustment factor becomes
NBV NewCost
RAF =
NewCost
18000 − 1800
RAF = = 0.9
18000
NBVnewcost is the net book value had the cost been 18,000 from the beginning
and had there been no adjustments. The resulting periodic depreciation is 311.11.
At this point, you are required to take into account the depreciation expenses that
were missed from the Amortization Start Date up to the current period.
Therefore, the total periodic depreciation in May-99 is 911. Moving on to the next
year, the Net Book Value is reset to (18000-508.89)=12911.11. Annual
depreciation rate is changed to 1/(60-18)=0.29 due to the reduction on remaining
life. Formula Factor needs to be adjusted to account for the change in basis:
1 1month
PeriodicDepreciation = 16800 * 0.29 * * 0.91084 * = 31111
.
0.9 12months
Notice that this periodic amount after the cost adjustment remains constant and
agrees with the requirement of a straight-line depreciation method.
Table 14: Setting Rate Adjustment Factor and Formula Factor during cost adjustment
Table 15: Depreciation expenses had the cost been 18,000 from Date Placed In Service
+---------------------------------------------------------------------------+
Oracle Assets: Version : 11.5.41 - Development
+---------------------------------------------------------------------------+
The above depreciation debug file shows the values derived by the depreciation
engine when depreciating an asset in the third month it was placed in service. The
asset had a five year life and was placed in service in May-99. The prorate period
is Jun-99. The calendar is monthly and is a Jan-Dec one. No transactions were
performed on this asset aside from depreciation. Here are the suggested
diagnostics steps for this simple depreciation scenario:
6. Verify the ann_deprn_value, taking into account the prorate date. In this
case, ann_deprn_value is 10000 * 0.2 * 7/12 = 1166.66667, i.e.,
adjusted_cost * annual rate * number of periods in the year since prorate
period / total periods in the year.
Tax lives of an asset depends on the property class. The MACRS property classes
under the General Depreciation System are presented below5:
b. Any property that does not have a class life and that has not been
5 Http://www.irs.gov/
20-year property includes farm buildings (other than single purpose agricultural or horticultural
structures).
Residential rental property includes real property such as a rental home or structure (including a
mobile home) if 80% or more of its gross rental income for the tax year is from dwelling units. A
dwelling unit is a house or apartment used to provide living accommodations in a building or
structure. It does not include a unit in a hotel, motel, inn, or other establishment where more than
half the units are used on a transient basis. If you occupy any part of the building or structure for
personal use, its gross rental income includes the fair rental value of the part you occupy. The
recovery period for this property is 27.5 years.
Nonresidential real property includes section 1250 property that is neither of the following.
39 years for property you placed in service after May 12, 1993, or
31.5 years for property you placed in service before May 13, 1993.
6 http://www.irs.gov