Paul bought a computer for $15,000 for business use on March 18,2013.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 2015.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, it can be assumed that he used MACRS (Modified Accelerated Cost Recovery System) method. According to MACRS, the recovery period for computers is 5 years. Therefore, the depreciation for the computer would be $3,000 per year ($15,000/5). As the computer was sold in 2015, there would be depreciation for only 3 years, which is $9,000. However, as Paul did not elect Sec.179, his depreciation deduction would be limited to $1,440 for 2015 ($15,000 x 9.6%). Therefore, the correct answer is B.

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