A taxpayer places a $50,000 5-year recovery period asset in service in 2019. This is the only asset placed in service in 2019. Assuming half-year convention, bonus depreciation, and taxable income before cost recovery of $5,000, what is the amount of cost recovery in 2019?

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Quizplus · Accepted Answer

Under the bonus depreciation rules, a taxpayer can immediately deduct 100% of the cost of eligible business property in the year it is placed in service. Since the asset in question is a $50,000 5-year recovery period asset placed in service in 2019, and assuming it qualifies for bonus depreciation, the taxpayer can deduct the entire $50,000 in 2019.

A Taxpayer Places a $50,000 5-Year Recovery Period Asset in Service