Shannon purchases equipment classified as 3-year property on December 19, 2014, at a cost of $100,000. Section 179 is not elected and Shannon does not use the straight-line method. Shannon purchased no other depreciable property in 2014. What is the amount of the MACRS depreciation deduction for 2014?

Question

Quizplus · Accepted Answer

Under MACRS for 3-year property, the half-year convention applies, and the depreciation rate for the first year is 33.33%. However, since the property was placed in service in the last quarter, the mid-quarter convention applies, and the rate for the first quarter is 8.33%. Therefore, the depreciation deduction is $100,000 * 8.33% = $8,330.

Shannon Purchases Equipment Classified as 3-Year Property on December 19