Accelerated Cost Recovery System


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Accelerated cost recovery system (ACRS)

Schedule of depreciation rates allowed for tax purposes.

Accelerated Cost Recovery System

An accounting technique formerly used in the United States to tax a tangible asset based upon its estimated depreciation. The estimated depreciation bore only a rough relationship to an asset's actual life, and was designed to decrease the taxation in the early years of an asset's ownership. ACRS was instituted by the Economic Recovery Act of 1981 and amended in 1986 to create the Modified Accelerated Cost Recovery System. See also: Absolute Physical Life.

Accelerated Cost Recovery System (ACRS)

An accounting technique for calculating the depreciation of tangible assets on the basis of the estimated-life classifications into which the assets are placed. ACRS was initiated by the Economic Recovery Act of 1981. The goal was to make investments more profitable by sheltering large amounts of income from taxation during the early years of an asset's life. The initial law established classifications of 3, 5, 10, and 15 years; these classifications were subsequently modified in order to reduce depreciation and increase the government's tax revenues. The classification into which an asset is placed determines the percentage of the cost potentially recoverable in each year. See also Modified Accelerated Cost Recovery System.

accelerated cost recovery system (ACRS)

A method of tax accounting in which the IRS simplified the rules for depreciation of property.It has been replaced by the modified accelerated cost recovery system (MACRS),but you will still encounter references to ACRS.

Accelerated Cost Recovery System (ACRS)

The system of depreciation mainly used for property placed in service after 1980 and before 1987. ACRS is also used for certain property placed in service after 1986 that is acquired from a related party who used the property before 1987. See Modified Accelerated Cost Recovery System (MACRS) for property placed in service after 1986.
References in periodicals archive ?
Our example used the modified accelerated cost recovery system with the required half year convention.
Property to which the original Accelerated Cost Recovery System (ACRS) applies (generally, property placed in service after 1980 but before 1987).
The Tax Court, citing Internal Revenue Code section 168(f)(1), said the taxpayer could choose not to use the modified accelerated cost recovery system (MACRS) as long as the property was properly depreciated under a method not based on the property's life.
To qualify, the property must fall into one of six categories: (1) property to which the modified accelerated cost recovery system (MACRS) rules apply and which has a recovery period of less than 20 years, (2) computer software not covered by Sec.
Prior to this ruling, Internal Revenue Code section 168 said that under the modified accelerated cost recovery system, property with a class life of 4 to 10 years could not be written off before 5 years and property with a class life of 10 to 15 years could not be written off before 7 years.
Because it applies only to properties placed in service before 1987, and because such properties had a maximum modified accelerated cost recovery system (MACRS) recovery period of 19 years, they will all be fully depreciated by 2007.
The calculation base equals the amount allowable under the modified accelerated cost recovery system (MACRS).
Before the accelerated cost recovery system (ACRS), taxpayers had to determine the length of the useful life to claim depreciation; if the useful life was indeterminate, depreciation was disallowed.
Depreciation-modified accelerated cost recovery system (MACRS) class lives
Surprisingly, the AJCA did not extend the 30% or 50% bonus cost recovery regime, thus subjecting assets placed in service after 2004 to normal modified accelerated cost recovery system depreciation and AMT adjustments.
An example of this is the book-tax difference arising from accelerated cost recovery system (ACRS) depreciation used for tax purposes and straight-line depreciation used for financial reporting.
Prior to the enactment of the modified accelerated cost recovery system (MACRS), the Service ruled that the average useful lives for the initial clearing and grading for electric transmission lines and electric distribution lines were 84 years and 46 years, respectively.

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