Alternative Depreciation System - ADS

DEFINITION of 'Alternative Depreciation System - ADS'

A depreciation schedule with a straight-line recovery period that generally mirrors the class life of the asset's depreciation. Taxpayers who elect to use the alternative depreciation system feel that the alternative schedule will allow for a better match of depreciation deductions against income than the regular recovery period. Once they have switched from an alternative such as the modified acceleration cost replacement system (MACRS), the taxpayer can not switch back.

BREAKING DOWN 'Alternative Depreciation System - ADS'

Taxpayers who choose the ADS schedule must use this schedule for all property of the same class that was placed in service during the taxable year. However, taxpayers may elect the ADS schedule for real estate on a property-by-property basis. The alternative depreciation system recovery schedule is listed in IRS Publication 946.

RELATED TERMS
  1. Half-Year Convention For Depreciation

    A depreciation schedule that treats all property acquired during ...
  2. Depreciation

    1. A method of allocating the cost of a tangible asset over its ...
  3. Depreciable Property

    Any type of asset that is eligible for depreciation treatment. ...
  4. Accumulated Depreciation

    The cumulative depreciation of an asset up to a single point ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax ...
  6. Bonus Depreciation

    An additional amount of deductible depreciation that is awarded ...
Related Articles
  1. Professionals

    Capital Cost Allowance And Depreciation

    Depreciation can be used as a tax deduction.
  2. Professionals

    Depreciation

    Depreciation
  3. Active Trading

    An Introduction To Depreciation

    Companies make choices and assumptions in calculating depreciation, and you need to know how these affect the bottom line.
  4. Professionals

    Types Of Depreciation

    These are types of depreciation that companies face.
  5. Professionals

    Depreciation

    CFA Level 1 - Depreciation. Summarizes the methods of depreciation, including the sinking-fund approach, and their impact on financial statements, taxes and ratios.
  6. Professionals

    Depreciation Accounting

    CFA Level 1 - Depreciation Accounting. This sections covers depreciation accounting. Includes formulas and sample calculations for a few common methods of finding depreciation.
  7. Investing

    How Does Depreciation Reduce My Tax Bill?

    How the depreciation tax rule can assist real estate investors.
  8. Professionals

    Modified Accelerated Cost Recovery System

    Modified Accelerated Cost Recovery System
  9. Investing

    How Rental Property Depreciation Works

    It's a bit tricky, but a valuable tool to make your investment pay off.
  10. Economics

    Double Declining Balance Depreciation Method

    The double declining balance depreciation method counts the depreciation of a long-lived asset’s book value at double the rate of its straight-line depreciation.
RELATED FAQS
  1. What is the relationship between accumulated depreciation and depreciation expense?

    Understand the relationship between accumulated depreciation and depreciation expense. Learn how each one is accounted for ... Read Answer >>
  2. How does accumulated depreciation affect net income?

    Learn why accumulated depreciation does not directly affect a company's net income; understand where a company accounts for ... Read Answer >>
  3. What are the different ways to calculate depreciation for tangible assets?

    Learn what depreciation is and how to calculate it using the straight line method, declining balance method, and the sum-of-the ... Read Answer >>
  4. Is depreciation only used for tangible assets?

    Learn if tangible assets can be depreciated, as well as what other assets are eligible for depreciation so you can account ... Read Answer >>
  5. What are the different ways to calculate depreciation?

    Read about some of the different allowable methods of calculating depreciation expenses as allowed by generally accepted ... Read Answer >>
  6. Why was the practice of depreciating assets for accounting purposes created?

    Read about why the practice of depreciation was created and how the uses of depreciation have morphed to adapt to technological ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center