Lax, LLC purchased only one asset during the current year (a full 12-month tax year). Lax placed in service computer equipment (5-year property) on August 26 with a basis of $20,000. Calculate the maximum depreciation expense for the current year (ignoring §179 and bonus depreciation). (Use MACRS Table 1)
A) $2,000.
B) $2,858.
C) $3,000.
D) $4,000.
E) None of the choices are correct.

Question

Lax, LLC purchased only one asset during the current year (a full 12-month tax year). Lax placed in service computer equipment (5-year property) on August 26 with a basis of $20,000. Calculate the maximum depreciation expense for the current year (ignoring §179 and bonus depreciation). (Use MACRS Table 1)
A) $2,000.
B) $2,858.
C) $3,000.
D) $4,000.
E) None of the choices are correct.

Quizplus · Accepted Answer

The asset's recovery period is 5 years and the half-year convention applies. The calculation is $20,000 × 0.20 = $4,000.

Lax, LLC Purchased Only One Asset During the Current Year