What is an Accelerated Cost Recovery System?

Often referred to as ACRS, accelerated cost recovery systems are essentially a ways to claim early depreciation on new goods, resulting in increased tax deductions for a given calendar year. Here is some background on the development of the accelerated cost recovery system, and why this process can be advantageous for a number of businesses. The modified ACRS was given life with the Tax Reform Act of 1986 in the United States. The purpose of the act was to create a standard system for depreciation of new purchases that would allow for an orderly system of claiming depreciation that would not vary from one situation to another. The Tax Act established specific depreciation methods for several different classes within the accelerated cost recovery system. Part of this structuring also involved defining what type of equipment was eligible for depreciation in various yearly increments, such as three, five, seven, ten, fifteen, or twenty year classes. At few of the criteria used to ...  more