Beth's business purchased only one asset during the current year (a full 12-month tax year). Beth placed in service machinery (7-year property) on December 1 with a basis of $50,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 2)
A) $1,785.
B) $2,500.
C) $7,145.
D) $10,000.
E) None of the choices are correct.

Question

Beth's business purchased only one asset during the current year (a full 12-month tax year). Beth placed in service machinery (7-year property) on December 1 with a basis of $50,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 2)
A) $1,785.
B) $2,500.
C) $7,145.
D) $10,000.
E) None of the choices are correct.

Quizplus · Accepted Answer

The asset's recovery period is 7 years and the mid-quarter convention applies because the property was placed in service during the fourth quarter. The calculation is $50,000 × 0.0357 = $1,785.

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