NAC361.1375. Determination of expected life, cost-index factors and depreciation.

     1. Personal property must be categorized by the specific type of property that it is or by the type of industry in which it is used. Each category must be assigned to a schedule of expected life which is based on commonly available sources of information, including, without limitation, the life expectancy guidelines published by the Marshall and Swift Valuation Service and any other sources published in the Personal Property Manual.

     2. The cost-index factors published in the Personal Property Manual must be determined by calculating the average change in costs over time. The Department shall identify the sources used to calculate the average change.

     3. For purposes of calculating the amount of applicable depreciation, personal property must be assigned to one of the following expected lives:

     (a) Three-year life;

     (b) Five-year life;

     (c) Seven-year life;

     (d) Ten-year life;

     (e) Fifteen-year life;

     (f) Twenty-year life; or

     (g) Thirty-year life.

     4. Depreciation must be calculated over the expected life of the personal property by using the declining balance method, except that tables which provide a method other than the declining balance method for calculating depreciation may be used if the tables have been approved by the Commission and included in the Personal Property Manual.

     5. For purposes of calculating the rate of depreciation, a residual amount of 5 percent must be used. Percent-good tables using a residual amount other than 5 percent may be adopted by the Commission if the Department has conducted a market study or has otherwise obtained information which indicates that a different residual amount is appropriate for the category in which the personal property is placed pursuant to subsection 1.

     (Added to NAC by Tax Comm’n by R034-03, eff. 12-4-2003)