Cruz Copy Shop purchases a new copy machine in July 2017 for $30,000.No other depreciable assets are placed in service in 2017.Since Cruz Copy Shop expects to be in a much higher tax bracket in future years,it desires to minimize its current cost recovery amount to the fullest extent possible.What is the amount of Cruz Copy Shop's MACRS straight-line depreciation for 2017?
A)$1,500
B)$2,143
C)$3,000
D)$3,213
E)$4,500

Question

Quizplus · Accepted Answer

The MACRS straight-line depreciation method for 5-year property (which includes copy machines) uses the percentages 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76% for years 1 through 6, respectively. 
Therefore, for the first year, the depreciation expense is: 
$30,000 x 20.00% = $6,000 
However, since Cruz Copy Shop wants to minimize its current cost recovery amount, it can choose to take only half of the depreciation expense in the first year and defer the other half to future years. Thus, the amount of MACRS straight-line depreciation for 2017 is $6,000 / 2 = $3,000. Therefore, the answer is (C) $3,000.

Cruz Copy Shop Purchases a New Copy Machine in July