Beth's business purchased only one asset during the current year (a full 12-month tax year). On December 1 Beth placed in service machinery (seven-year property)with a basis of $74,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 2.)(Round final answer to the nearest whole number.)
A)$2,642
B)$3,700
C)$10,573
D)$14,800
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

Using the MACRS Table 2 for seven-year property, the first-year depreciation rate is 14.29%. However, since the machinery was placed in service in December, only 1/2 month of depreciation applies for the first year. Thus, $74,000 * 14.29% * 0.5 = $5,284.30, rounded to the nearest whole number is $2,642.

Beth's Business Purchased Only One Asset During the Current Year