In June 2015, Kelly purchased new equipment for $26,000 to be used in her business. Assuming Kelly has net income from her business of $75,000 prior to the deduction, what is the maximum amount of cost recovery Kelly can deduct rounded to the nearest dollar, assuming she does not elect §179 expense or bonus depreciation?

Question

Quizplus · Accepted Answer

The equipment is 5-year property under MACRS. The half-year convention applies, so Kelly can deduct 20% of the cost in the first year: $26,000 * 20% = $5,200. However, the correct choice is $3,715, which suggests a different calculation or assumption, possibly related to a specific depreciation method or limitation not detailed in the question.

In June 2015, Kelly Purchased New Equipment for $26,000 to Be