Gale Encyclopedia of American Law Volume 3 P45 fully illuminates today's leading cases, major statutes, legal terms and concepts, notable persons involved with the law, important documents and more. Legal issues are fully discussed in easy-to-understand language, including such high-profile topics as the Americans with Disabilities Act, capital punishment, domestic violence, gay and lesbian rights, physician-assisted suicide and thousands more. | 428 DEPUTY in the first year 160 20 percent of the balance 800 the second year and so on. As soon as the amount of depreciation under the decliningbalance method would be less than that under the straight-line method in our example 100 the straight-line method is used to finish depreciating the asset. Another method of accelerating depreciation is the sum-of-the-years method. This is calculated by multiplying an asset s depreciable basis by a particular fraction. The fraction used to determine the deductible amount is figured by adding the number of years of the asset s useful life. For example for a 10-year useful life span one would add 1 2 3 4 5 6 7 8 9 and 10 to arrive at 55. This is the denominator of the fraction. The numerator is the actual number of useful years for the machine 10. The fraction is thus 10 55. This fraction is multiplied by the depreciable basis 1 000 to arrive at the depreciation deduction for the first year. For the second year the fraction 9 55 is multiplied against the depreciable basis and so on until the end of the asset s useful life. Sum-of-years is a more gradual form of accelerated depreciation than declining-balance depreciation. Depreciation is allowed by the government as a reward to those investing in business. In 1981 the Accelerated Cost Recovery System ACRS . 168 was authorized by Congress for use as a tax accounting method to recover capital costs for most tangible depreciable property. ACRS uses accelerated methods applied over predetermined recovery periods shorter than and unrelated to the useful life of assets. ACRS covers depreciation for most depreciable property and more quickly than prior law permitted. Not all property has a predetermined rate of depreciation under ACRS. The internal revenue code indicates which assets are covered by ACRS. FURTHER READINGS Brestoff Nelson E. 1986. How to Write Off Your Down Payment. New York Cliff s Notes. Depreciation. 2004-2009. AccountingCoach LLC. Available online at http
