Pat purchased a used five-year class asset on March 15, 2014, for $60,000. He did not elect § 179 expensing. Determine the cost recovery deduction for 2014 for earnings and profits purposes.

Question

Quizplus · Accepted Answer

The class life for a five-year asset is 20% and the half-year convention applies in the first year of service. Therefore, the cost recovery deduction for 2014 is $6,000 ($60,000 x 20% x ½).

Pat Purchased a Used Five-Year Class Asset on March 15