Gregory Corporation, a calendar-year corporation, purchased an office building in March of year 1.In September of year 17, it sold the building.What fraction must be applied to the MACRS percentage to determine the year 17 depreciation?
A)3/12
B)7.5/12
C)8.5/12
D)9/12

Question

Quizplus · Accepted Answer

Under the MACRS mid-month convention, when an asset is sold, the depreciation for the year of sale is prorated based on the number of months the asset was held. Since the building was sold in September, it was held for 8.5 months in year 17. Therefore, the fraction is 8.5/12.

Gregory Corporation, a Calendar-Year Corporation, Purchased an Office Building in March