On July 15, 2013, Travis purchased some office furniture for $20,000 to be used in his business. He did not elect to expense the equipment under §179 or bonus. On December 15, 2015, he sells the equipment. What is his cost recovery deduction for 2015?

Question

Quizplus · Accepted Answer

The cost recovery deduction for 2015 is $1,749. This is because Travis has owned the equipment for more than two years, so he is eligible to take a cost recovery deduction. The cost recovery period for office furniture is seven years, so Travis can deduct 1/7 of the cost of the equipment each year. In 2015, he can deduct 1/7 of $20,000, which is $2,857. However, he has already taken a cost recovery deduction of $1,108 in 2014, so his cost recovery deduction for 2015 is $2,857 - $1,108 = $1,749.

On July 15, 2013, Travis Purchased Some Office Furniture for $20,000