MACRS

MACRS stands for "Modified Accelerated Cost Recovery System". It's a way that the United States government helps businesses to figure out how much they can deduct from their taxes each year for things they buy that wear out over time, like buildings, cars, or machines.

So, let's say a company buys a big piece of machinery for $10,000. The government doesn't want the company to have to deduct that whole $10,000 all in one year, because the machinery will still be working for years to come. Instead, they break it up into smaller pieces called "depreciable basis".

Each basis has a specific useful life assigned to it, which is how long the government thinks that part of the machinery will be useful. So, let's pretend the useful life of this particular machinery is five years.

Using MACRS, the company would be able to deduct a certain amount of money from their taxes each year for those five years until they've totally recovered the cost of the machinery. The government sets up specific percentages the company is allowed to use when figuring out how much they can deduct each year, called "depreciation tables".

In summary, MACRS is a way the government helps businesses to spread out the tax deductions for things they buy that wear out over time, so that they can recover the cost more gradually.