The Senate Finance Committee released a tax reform staff discussion draft on cost recovery and accounting as part of a series of tax reform proposals in late 2013. The Cost Recovery and Accounting (“CR&A”) proposal completely redesigns the depreciation deduction in an effort to simplify, update, and match the tax life of assets with the economic life of assets and has made waves by proposing to significantly delay how quickly assets can be depreciated. The draft also repeals several non-depreciation, timing-related provisions.

This alert describes the CR&A discussion draft, compares the treatment of assets under the CR&A proposal to current law, and offers insights on the possible next steps for the proposal.