Cruz Copy Shop purchases a new copy machine in July 2018 for $30,000. No other depreciable assets are placed in service in 2018. 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 2018?
A)$1,500
B)$2,143
C)$3,000
D)$3,213
E)$4,500

Question

Quizplus · Accepted Answer

The MACRS straight-line depreciation for 2018 can be calculated as follows:

- Determine the depreciation period based on the MACRS table. For a copy machine, this is 5 years. 
- Determine the applicable percentage for the first year based on the MACRS table. For a 5-year property, this is 20%. 
- Multiply the cost of the asset by the applicable percentage to get the depreciation expense for the first year.

Using these steps, the MACRS straight-line depreciation for 2018 would be:

$30,000 x 20% = $6,000
$6,000 / 2 (since the convention for mid-quarter placed in service in July) = $3,000

Therefore, the best choice is C, $3,000.

Cruz Copy Shop Purchases a New Copy Machine in July