Paul bought a computer for $15,000 for business use on March 18, 2016. This was his only purchase for that year. Paul used the most accelerated depreciation method available, but did not elect Sec. 179 and the property did not qualify for bonus depreciation. Paul sells the machine in 2018. The depreciation on the computer for 2018 is

Question

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The computer is a 5-year property under MACRS. In the third year (2018), the depreciation rate is 19.20%. Therefore, $15,000 * 19.20% = $2,880. However, since the computer was sold in 2018, the depreciation is prorated for the part of the year it was used. Assuming a half-year convention, the depreciation is $2,880 / 2 = $1,440.

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