Paul bought a computer for $15,000 for business use on March 18,2014.This was his only purchase for that year.Paul used the most accelerated depreciation method available,but did not elect Sec.179.Bonus depreciation was not available.Paul sells the machine in 2016.The depreciation on the computer for 2015 is
A)$0.
B)$1,440.
C)$1,500.
D)$2,880.

Question

Quizplus · Accepted Answer

Since Paul used the most accelerated depreciation method available (presumably MACRS), and did not elect Sec.179 or have access to bonus depreciation, the depreciation schedule would be: $15,000 x 0.2 (since the computer would be in the 5-year MACRS property class) x 0.4 (since half-year depreciation would be taken in the first year of ownership) = $1,200 for 2014; $15,000 x 0.32 (since 80% of the computer's basis would remain after the first year of ownership, the depreciation percentage for year 2) = $4,800 for 2015; and $15,000 x 0.192 (the next depreciation percentage for year 3) = $2,880 (which would represent the depreciation deduction for the year before the computer was sold in 2016). Therefore, the depreciation for 2015 would be $4,800.

Paul Bought a Computer for $15,000 for Business Use on March