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Asset Depreciation Range

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Asset depreciation range refers to a system used to determine the useful life of different classes of assets. Under the asset depreciation range system, all tangible assets were placed in one of over 100 asset classes, which were based on the taxpayer's particular business and industry. The range of years in an asset depreciation range system was about 20% above and below the IRS's projected life of an asset. The IRS established this elective asset depreciation range system for assets placed into service after 1970 to minimize disputes about repairs, salvage value, and useful life. Provided taxpayers stayed within the 20% margin of the asset depreciation range, the IRS accepted the figure a taxpayer used for useful life. The asset depreciation range system also permitted taxpayers to use, at their discretion, an optional repair allowance method. However, because disputes continued to arise, congress replaced the asset depreciation range system with the simpler Accelerated Cost Recovery System (ACRS) in 1981. In 1986, the asset depreciation range system was revived by modifications to the ACRS (i.e. MACRS) under the Tax Reform Act of 1986.



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