Harrison acquires $65,000 of 5-year property in June 2012 that is required to be depreciated using the mid-quarter convention (because of other purchases that year).He did not elect Sec.179 immediate expensing.Bonus depreciation was not available.If Harrison sells the property on August 23,2014,what is the amount of depreciation claimed in 2014?
A)$6,500.00
B)$7,312.50
C)$11,700.00
D)$9,289.00

Question

Quizplus · Accepted Answer

Since the mid-quarter convention is required and the property was acquired in June 2012, it would fall in the mid-quarter of that year. Therefore, the first year's depreciation would be $2,600 ($65,000 x 2/12 x 20%). For 2013, the full-year depreciation would be $13,000 ($65,000 x 20%). For 2014, since the property is sold before the end of the year, it would be treated as if it was sold in the middle of the year under the mid-quarter convention. Therefore, the depreciation for 2014 would be $7,312.50 ($65,000 x 7/12 x 20%).

Harrison Acquires $65,000 of 5-Year Property in June 2012 That