Durna Inc., a calendar year taxpayer, made two asset purchases this year. The first purchase was a machine costing $874,000, and the second purchase was equipment costing $660,000. Both assets are 7-year recovery property. Durna placed the machine in service on March 27 and the equipment in service on December 14. How many months of MACRS depreciation is Durna allowed for each asset?
A) Durna is allowed six months depreciation for the machine and 1.5 months of depreciation for the equipment.
B) Durna is allowed 10.5 months depreciation for the machine and 1.5 months of depreciation for the equipment.
C) Durna is allowed 1.5 months of depreciation for both the machine and the equipment.
D) Durna is allowed six months of depreciation for both the machine and the equipment.

Question

Durna Inc., a calendar year taxpayer, made two asset purchases this year. The first purchase was a machine costing $874,000, and the second purchase was equipment costing $660,000. Both assets are 7-year recovery property. Durna placed the machine in service on March 27 and the equipment in service on December 14. How many months of MACRS depreciation is Durna allowed for each asset?  
A) Durna is allowed six months depreciation for the machine and 1.5 months of depreciation for the equipment.
B) Durna is allowed 10.5 months depreciation for the machine and 1.5 months of depreciation for the equipment.
C) Durna is allowed 1.5 months of depreciation for both the machine and the equipment.
D) Durna is allowed six months of depreciation for both the machine and the equipment.

Quizplus · Accepted Answer

The midquarter convention applies because Durna placed more than 40% (43%) of its depreciable personalty into service in the fourth quarter.

Durna Inc, a Calendar Year Taxpayer, Made Two Asset Purchases This