Alice purchased office furniture on September 20, 2018, for $100,000.On October 10, 2018, she purchased business computers for $80,000.Alice placed all of the assets in service on January 15, 2019.She did not elect to expense any of the assets under § 179, did not elect straight-line cost recovery, and did not take additional first-year depreciation.Determine the cost recovery deduction for the business assets for 2019.

Question

Quizplus · Accepted Answer

The cost recovery deduction is calculated using the Modified Accelerated Cost Recovery System (MACRS). For the office furniture (7-year property), the deduction is $100,000 * 14.29% = $14,290. For the computers (5-year property), the deduction is $80,000 * 20% = $16,000. Total deduction = $14,290 + $16,000 = $30,290.

Alice Purchased Office Furniture on September 20, 2018, for $100,000