Bonnie Jo purchased a used camera (five-year property)for use in her sole proprietorship. The basis of the camera was $2,400. Bonnie Jo used the camera in her business 60 percent of the time and used it for personal purposes the rest of the time during the first year. Calculate Bonnie Jo's depreciation deduction during the first year, assuming the sole proprietorship had a loss during the year. (Bonnie did not place the property in service in the last quarter.)(Use MACRS Table 1.)
A)$240
B)$288
C)$480
D)$2,400
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

Since Bonnie used the camera 60% of the time for business purposes, the depreciable basis for the camera is $2,400 x 60% = $1,440.

Using MACRS Table 1 and assuming the camera was purchased and placed in service in the first quarter, the depreciation deduction for Year 1 would be:

Year 1: $1,440 x 20.00% = $288

Since the sole proprietorship had a loss during the year, Bonnie can deduct the full amount of the depreciation deduction, which is $288. Therefore, the correct answer is B, $288.

Bonnie Jo Purchased a Used Camera (Five-Year Property)for Use in Her