The Accelerated Cost Recovery System (ACRS) was a method for depreciating property for tax purposes in the United States, allowing for accelerated depreciation schedules compared to traditional methods. This system has largely been replaced by the Modified Accelerated Cost Recovery System (MACRS).
An adjusted basis, or adjusted tax basis, refers to the original cost or other basis of property, reduced by depreciation deductions and increased by capital expenditures. It serves as the base amount from which to measure gains and losses for tax purposes.
The completed-contract method is an accounting approach where net profit on a long-term contract is reported only when the contract is fully completed. Pre-completion expenses are also deferred until the project is finished.
The contract price in an installment sale, for tax purposes, is generally defined as the selling price less the existing mortgages assumed by the buyer. This definition is crucial for correctly determining the taxable portion of payments received from the sale.
The current-year basis is an accounting principle used for tax assessment in the UK, wherein profits are taxed in a fiscal year based on the profits arising in the accounts for the period ending within that same tax year.
The direct write-off method is a process where bad debts are written off as they occur instead of creating a provision for them. While this method is unacceptable for financial reporting purposes under GAAP, it is the only method allowed for tax purposes in the United States.
Personal residence refers to the dwelling unit that an individual claims as their primary home, which establishes their legal residence for voting, tax, and legal purposes.
For tax purposes, a student is defined as an individual who, during at least five calendar months of the tax year, is a full-time student at a qualified educational institution or is pursuing a full-time course of institutional on-farm training.
