Pat purchased a used five-year class asset on March 15,2013,for $60,000.He did not elect § 179 expensing.Determine the cost recovery deduction for 2013 for earnings and profits purposes.
A)$2,000.
B)$3,000.
C)$6,000.
D)$12,000.
E)None of the above.

Question

Quizplus · Accepted Answer

The property is a five-year class asset, so the MACRS recovery period is five years. Using the half-year convention, the property is considered to be placed in service on July 1, 2013. The applicable MACRS percentage for 2013 is 20%, so the cost recovery deduction for 2013 is calculated as (20% x $60,000) / 2 = $6,000.

Pat Purchased a Used Five-Year Class Asset on March 15,2013,for