723 / What is the alternative depreciation system that may be used to calculate depreciation on property placed in service after 1986?

An alternative depreciation system is provided for (1) tangible property used predominately outside the United States, (2) tax-exempt use property, (3) tax-exempt bond financed property, (4) certain imported property covered by an executive order regarding countries engaging in unfair trade practices, and (5) property for which an election is made. The election may be made with respect to each property in the case of nonresidential real property and residential rental property. For all other property, the election is made with respect to all property placed in service within a recovery class during a taxable year.¹

The alternative depreciation is determined using the straight line method and the applicable convention, above, over the following periods:²

tax-exempt use property subject to a lease	longer of 125 percent of lease term or period below
residential rental property
and nonresidential real property	40 years
personal property with no class life	12 years
railroad grading or tunnel bore	50 years
all other property	the class life

TRA ’86 assigns certain property to recovery periods without regard to their class life, e.g., automobiles and light trucks.