Wheeler LLC purchased two assets during the current year (a full 12-month tax year). Wheeler placed in service computer equipment (5-year property) on November 16 with a basis of $15,000 and furniture (7-year property) on April 20 with a basis of $11,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 2) (Round final answer to the nearest whole number.)
A) $1,285.
B) $2,714.
C) $4,572.
D) $5,200.
E) None of the choices are correct.

Question

Wheeler LLC purchased two assets during the current year (a full 12-month tax year). Wheeler placed in service computer equipment (5-year property) on November 16 with a basis of $15,000 and furniture (7-year property) on April 20 with a basis of $11,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 2) (Round final answer to the nearest whole number.)
A) $1,285.
B) $2,714.
C) $4,572.
D) $5,200.
E) None of the choices are correct.

Quizplus · Accepted Answer

The mid-quarter convention applies because more than 40% of the years' assets were placed in service in the fourth quarter of the tax year. The computer is 4ᵗʰ quarter property and the furniture is 2ⁿᵈ quarter property. The calculations are $15,000 × 0.05 = $750 and $11,000 × 0.1785 = $1,964. The total is $2,714 ($750 + $1,964).

Wheeler LLC Purchased Two Assets During the Current Year (A