Moore Corporation (a calendar-year taxpayer), acquired a 5-year asset costing $10,000 on April 2^nd.What are the first and last years of MACRS depreciation deductions using the mid-quarter convention? A)$3,500 and $138 B)$2,500 and $426 C)$1,500 and $706 D)$500 and $958

Question

Quizplus · Accepted Answer

The mid-quarter convention applies when more than 40% of the total depreciable property is placed in service in the last quarter of the year. Under this convention, the asset is treated as placed in service in the midpoint of the quarter of acquisition. For a 5-year asset, the MACRS depreciation rates for the first and last years (considering the mid-quarter convention) would result in lower depreciation in the first year and a higher remaining basis in the last year, leading to the correct answer being $2,500 for the first year and $426 for the last year.

Moore Corporation (A Calendar-Year Taxpayer), Acquired a 5-Year Asset Costing