Terrance Inc., a calendar year taxpayer, purchased used equipment for $2,765,000 and placed it in service on March 4, 2017. The equipment was seven-year recovery property and was the only depreciable asset that Terrance purchased during 2017.
a. Compute Terrance's tax depreciation with respect to the equipment for 2017 and 2018.
b. Compute Terrance's adjusted basis in the equipment on December 31, 2018.
c. How would your answers to a. and b. change if the equipment was placed in service in 2018 instead of 2017?

Question

Quizplus · Accepted Answer

The Answer of Terrance Inc., a calendar year taxpayer, purchased used equipment for $2,765,000 and placed it in service on March 4, 2017. The equipment was seven-year recovery property and was the only depreciable asset that Terrance purchased during 2017.
a. Compute Terrance's tax depreciation with respect to the equipment for 2017 and 2018.
b. Compute Terrance's adjusted basis in the equipment on December 31, 2018.
c. How would your answers to a. and b. change if the equipment was placed in service in 2018 instead of 2017?