What is the primary purpose of the Modified Accelerated Cost Recovery System (MACRS)?

The primary purpose of the Modified Accelerated Cost Recovery System (MACRS) is to determine the depreciation rate for property placed in service after a specific date. Under MACRS, assets are classified into different classes, each with its own depreciation schedule that specifies the useful life of the asset and the corresponding rate at which it can be depreciated. This system allows for accelerated depreciation, meaning that taxpayers can deduct a larger portion of the asset's cost in the early years of its useful life. This benefits businesses by reducing taxable income in those years when expenses may be higher but income may not be.

The context of the other options: determining the depreciation rate specifically for real estate pertains to different rules beyond MACRS, capital gains calculations involve the selling price and basis of an asset rather than depreciation, and tax codes for foreign investments are governed by other regulations unrelated to the principles of depreciation outlined by MACRS.