Federal Tax

Depreciation: MACRS and ACRS (Portfolio 531)

  • This Portfolio examines the depreciation deduction under the modified accelerated cost recovery system (MACRS) and the original accelerated cost recovery system (ACRS) of §168.

Description

Bloomberg Tax Portfolio, Depreciation: MACRS and ACRS, No. 531, is a basic reference tool for determining the depreciation deduction under both the modified accelerated cost recovery system (MACRS) and the original accelerated cost recovery systems (ACRS) of §168. Although MACRS and ACRS are similar in many respects, there are substantial differences between them. Accordingly, this portfolio provides “ACRS Differences” descriptions in connection with each issue with respect to which there is a difference. MACRS applies generally to property placed in service after 1986. ACRS applies generally to property placed in service from 1981 through 1986. Topics covered include effective dates and the anti-churning rules, eligible property, basis, classification of property, computation of the deduction (including the use of statutory or IRS-created tables), and limitations and special rules affecting the availability or amount of the deduction.

Under both MACRS and ACRS, certain “recovery periods” (analogous to depreciable lives under the pre-ACRS depreciation system of §167) are prescribed and salvage value is ignored. The deduction can generally be computed by simply applying a factor from a statutory or IRS-provided table. More complex computations may be required, however, in many circumstances; these circumstances and the required computations are described in this Portfolio.

Table of Contents

I. Introduction
II. Effective Dates
III. Property Eligible for MACRS or ACRS
IV. Unadjusted Basis
V. Recovery Period and Classification of Property
VI. Recovery Percentages
VII. Special Rules Affecting Computation of Deduction
VIII. Miscellaneous Matters

maule-james-2015
James Maule
Professor of Law, Emeritus
Villanova University School of Law
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