Tuesday, February 7, 2012

Cost Recovery Schedules Depreciation

§168 of the Internal Revenue Code provides various cost recovery schedules. Under the accelerated cost recovery system” ACRS, the cost recovery of an asset depends on three things:

  1. The total amount of cost to be recovered
  2. The number of years over which the cost is to be recovered
  3. The rate at which the cost is to be recovered over those years

The total amount of cost to be recovered  by the taxpayer is the total expected decline in value while the asset is used in the taxpayer’s business, as measured by the different between the original cost and the salvage value. 

The Internal Revenue Service (IRS) allows that the depreciation of an asset is $0 under § 168(b)(4).

1 comment:

tax schedule depreciation commercial said...

When a business purchases an asset (long or short term), it places the asset on the books at cost. The business then expenses a short-term asset and depreciates a long-term asset (often called a fixed asset).

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