- 35 -
In General
Section 167 prescribes general rules governing the
depreciation deduction, which provides a reasonable allowance for
the exhaustion, wear and tear of property used in a trade or
business or held for the production of income. Section 168,
added to the Internal Revenue Code (Code) by the Economic
Recovery Tax Act of 1981 (ERTA), Pub. L. 97-34, 95 Stat. 172,
describes a specific depreciation system, entitled "Accelerated
Cost Recovery System" (ACRS), applicable generally for tangible,
depreciable property placed in service after December 31, 1980.
ERTA, secs. 201(a), 209(a), 95 Stat. 226. During 1986, Congress
replaced ACRS with a modified accelerated cost recovery system
(MACRS), effective generally for tangible, depreciable property
placed in service after December 31, 1986. Tax Reform Act of
1986 (TRA-86), Pub. L. 99-514, secs. 201, 203, 100 Stat. 2122-
2123, 2143. Accordingly, the disputed property items placed in
service during 1985 and 1986 are subject to the ACRS rules, and
the disputed property items placed in service after 1986 are
subject to the MACRS rules.
ACRS
Congress enacted ACRS to stimulate the economy by allowing
greater depreciation deductions over shorter depreciation periods
and to simplify the depreciation rules. Sprint Corp. v.
Commissioner, 108 T.C. 383 (1997); Simon v. Commissioner, 103
T.C. 247, 255 (1994), affd. 68 F.3d 41 (2d Cir. 1995); Liddle v.
Page: Previous 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 NextLast modified: May 25, 2011