A taxpayer places a $50,000 5-year recovery period asset in service in 2015. This is the only asset placed in service in 2015. Assuming half-year convention, no immediate expensing and no income limitation, what is the amount of total cost recovery deduction if bonus depreciation is extended into 2015?

Question

A taxpayer places a $50,000 5-year recovery period asset in service in 2015. This is the only asset placed in service in 2015. Assuming half-year convention, no immediate expensing and no income limitation, what is the amount of total cost recovery deduction ​if bonus depreciation is extended into 2015?​

Quizplus · Accepted Answer

With bonus depreciation extended into 2015, the taxpayer can take 50% bonus depreciation in the first year, which is $25,000. Additionally, they can take the regular MACRS depreciation on the remaining $25,000, which is $5,000 (20% of $25,000 for the first year under the half-year convention). Thus, the total cost recovery deduction is $30,000.

A Taxpayer Places a $50,000 5-Year Recovery Period Asset in Service