SNZ Inc. purchased machinery and equipment in the amount of $30,000 on January 1, 2019. SNZ plans to depreciate the asset straight-line over 20 years with no salvage value. For tax purposes these assets are to be depreciated using a capital cost allowance rate of 20%. The half-year rule applies. SNZ pays tax at a rate of 25%. What is the tax basis of these assets on January 1, 2019?

Question

Quizplus · Accepted Answer

The tax basis of an asset is its original cost before any depreciation is taken. On January 1, 2019, the tax basis of the machinery and equipment is their original purchase price of $30,000.

SNZ Inc Purchased Machinery and Equipment in the Amount of $30,000