Accelerated Cost Recovery System

Definition of "Accelerated cost recovery system"

Written by

Afshan Moosa

Coldwell Banker Residential Broker

The accelerated cost recovery system is a depreciation system for tax purposes mandated by the Economic Recovery Tax Act of 1981. In 1986 the Accelerated Cost Recovery System (ACRS) was replaced with the modified accelerated cost recovery system (MACRS). The tax reform changed the rules for the depreciation of assets that were purchased between 1980 and 1986. It was signed by President Ronal Regan only six months after he became President and affected the depreciation and increased how much deductions property owners were allowed to demand. The leaders that proposed this tax act thought that the reform would send the country’s economy on accelerated growth.

The accelerated cost recovery system is a way to accelerate the depreciation of a property that allows more significant tax deductions for property owners. The types of properties are divided into classes. Instead of providing statutory tables, prescribed depreciation methods are assigned to each class of property by a predetermined period of time, in this case, between 1980 and December of 1986.

How did the Accelerated Cost Recovery System work?

The accelerated cost recovery system affects depreciation based on a recovery period determined by the IRS and not by the property’s actual usability and life. It’s also applied to companies as within the Economic Recovery Tax Act of 1981; incentives were also included for small businesses and retirement savings.

The tax reform also allowed for a reduction of taxes on capital gains from 28% to 20% and a more significant estate-tax exemption. For companies, the accelerated cost recovery system would increase the depreciation amounts providing more substantial tax returns. Like this, the company could use more revenue generated from its assets for investments or debt that is due.

The Economic Recovery Tax Act of 1981 remained a somewhat controversial tax reform as the most significant impact was felt by the rich. To this day, it was the most significant tax cut for the wealthy Americans decreasing the top rate taxes from 70% to 50% in around three years. In the meantime, the poor had tax cuts from 14% to 11%. 

Need help as a:

I am a buyer

I am a realtor

I'm interested to:

Buy

Sell

Rent

I work in:

Residential

Commercial

Rental

Reach out to the local professionals for help

Where?

Name

Phone

Email

 

I agree to receive FREE real estate advice.

Agents, get listed in your area. Sign up Now!

Here's what you'll get:

1. Full zipcodes coverage for the city of your choice for 3 months

2. The ability to reach a wider audience

3. No annual contract and no hidden fees

4. Live customer support/No robo calls

$75 - Any City - 3 Months Coverage

Where?

First Name

Last Name

Cellphone

Email

Credit Card Number

Credit Exp Date*

01 02 03 04 05 06 07 08 09 10 11 12 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043

CCV*

Billing Zip code*

 

Please wait ...

I agree to receive FREE real estate advice

I agree with Terms & Conditions and Section 5-5.9.