What does the Modified Accelerated Cost Recovery System (MACRS) apply to?

The Modified Accelerated Cost Recovery System (MACRS) applies to tangible, personal, and real property, which is the reason for the selection of this answer. MACRS is a method of depreciation used in the United States, established by the Tax Reform Act of 1986, that allows businesses to recover the cost of tangible assets over a specified life span.

Tangible property includes equipment, machinery, and vehicles, which are categorized as personal property, while real property pertains to buildings and other structures. Under MACRS, these assets can be depreciated over different periods depending on their classification, providing businesses with a tax advantage by allowing for accelerated depreciation as compared to straight-line methods.

The other options refer to different types of assets that are not covered by MACRS; for instance, intellectual property is often amortized rather than depreciated, and financial assets such as stocks or bonds do not fall within the MACRS framework. The focus on tangible property in this context is critical for understanding how businesses can utilize MACRS for tax purposes.