Terrance Inc., a calendar year taxpayer, purchased used equipment for $2,765,000 and placed it in service on March 4, 2020. The equipment was seven-year recovery property and was the only depreciable asset that Terrance purchased during 2020 (assume no election for Section 179 expense and no Bonus Depreciation taken). Use Table 7-2.
Compute Terrance's tax depreciation with respect to the equipment for 2020 and 2021.Compute Terrance's adjusted basis in the equipment on December 31, 2021.

Question

Quizplus · Accepted Answer

The Answer of Terrance Inc., a calendar year taxpayer, purchased used equipment for $2,765,000 and placed it in service on March 4, 2020. The equipment was seven-year recovery property and was the only depreciable asset that Terrance purchased during 2020 (assume no election for Section 179 expense and no Bonus Depreciation taken). Use Table 7-2.
Compute Terrance's tax depreciation with respect to the equipment for 2020 and 2021.Compute Terrance's adjusted basis in the equipment on December 31, 2021.