Liabilities like Cash: Crane vs. Maimonides

May 1, 2010 by Noam Waltuch

I. The U.S. Tax System’s Treatment of Liabilities like Cash  The United States Tax system allows for deductions called ACRS (Accelerated Cost Recovery System), or otherwise known as depreciation deductions.[1]  These deductions are intended to be an allowance for the decline in the value of a building in trade or business due to wear and tear.[2]  Normally, there needs to be a realization event – either a sale or exchange – in order for a tax or deduction to be administered.[3]  Depreciation deductions are an exception to this rule. These deductions are taken by the taxpayer while he is holding the property, without a sale or exchange.[4]  The theory behind allowing depreciation deductions without a realization event is that “there [....] Read More…