What is a key feature of the MACRS depreciation method?

The MACRS (Modified Accelerated Cost Recovery System) depreciation method is a significant tax regulation in the United States that allows businesses to depreciate qualifying property for tax purposes. One key feature of MACRS is that it does not consider the residual value when calculating depreciation. This means that businesses can deduct the full cost of the asset over its useful life without needing to account for its expected salvage value at the end of that life. This approach leads to a larger tax benefit in the earlier years of the asset's life, which can be advantageous for businesses seeking immediate tax relief.

The idea behind this method is to encourage investment in new assets by providing enhanced upfront tax deductions compared to other depreciation methods that do factor in residual value. Understanding this feature is crucial for businesses as they make investment decisions and prepare taxes, as it affects both cash flow and financial projections.