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IRS.gov Website
Publication 534
taxmap/pubs/p534-002.htm#en_us_publink100043592

What Can and Cannot Be Depreciated Under ACRS(p2)

rule
ACRS applies to most depreciable tangible property placed in service after 1980 and before 1987. It includes new or used and real or personal property. The property must be for use in a trade or business or for the production of income. Property you acquired before 1981 or after 1986 is not ACRS recovery property. For information on depreciating property acquired before 1981, see chapter 2. For information on depreciating property acquired after 1986, see chapter 4 of Pub. 946.
taxmap/pubs/p534-002.htm#en_us_publink100043593

Recovery Property(p2)

rule
Recovery property under ACRS is tangible depreciable property placed in service after 1980 and before 1987. It generally includes new or used property that you acquired after 1980 and before 1987 for use in your trade or business or for the production of income.
taxmap/pubs/p534-002.htm#en_us_publink100043594

Nonrecovery Property(p2)

rule
You cannot use ACRS for property you placed in service before 1981 or after 1986. Nonrecovery property also includes:
  1. Intangible property,
  2. Property you elected to exclude from ACRS that is properly depreciated under a method of depreciation that is not based on a term of years,
  3. Certain public utility property, and
  4. Certain property acquired and excluded from ACRS because of the antichurning rules.
taxmap/pubs/p534-002.htm#en_us_publink100043595

Intangible property. (p2)

rule
Intangible property is not depreciated under ACRS.
taxmap/pubs/p534-002.htm#en_us_publink100043596

Property depreciated under methods not expressed in a term of years. (p2)

rule
Certain property depreciated under a method not expressed in a term of years is not depreciated under ACRS. This included any property:
  1. If you made an irrevocable election to exclude such property; and
  2. In the first year that you could have claimed depreciation, you properly used the unit-of-production method or any method of depreciation not expressed in a term of years (not including the retirement-replacement-betterment method).
taxmap/pubs/p534-002.htm#en_us_publink100043597

Public utility property.(p3)

rule
Public utility property for which the taxpayer does not use a normalization method of accounting is excluded from ACRS and is subject to depreciation under a special rule.
taxmap/pubs/p534-002.htm#en_us_publink100043598

Additions or improvements to ACRS property after 1986. (p3)

rule
Any additions or improvements placed in service after 1986, including any components of a building (plumbing, wiring, storm windows, etc.) are depreciated using MACRS, discussed in chapter 4 of Pub. 946. It does not matter that the underlying property is depreciated under ACRS or one of the other methods.