Anne LLC purchased computer equipment (5-year property)on August 29 for $30,000 and used the half-year convention.Anne LLC did not take §179 or bonus depreciation in the year it acquired the computer equipment.During the current year,which is the fourth year Anne LLC owned the property,the property was disposed of on January 15.Calculate the maximum depreciation expense.(Use MACRS Table 1 in the text)

Question

Anne LLC purchased computer equipment (5-year property)on August 29 for $30,000 and used the half-year convention.Anne LLC did not take §179 or bonus depreciation in the year it acquired the computer equipment.During the current year,which is the fourth year Anne LLC owned the property,the property was disposed of on January 15.Calculate the maximum depreciation expense.(Use MACRS Table 1 in the text)

Quizplus · Accepted Answer

In the fourth year, using the half-year convention for 5-year property, the depreciation rate is 11.52%. Since the property was disposed of in the fourth year, only half of the annual depreciation is allowed. Therefore, the depreciation expense is $30,000 * 11.52% * 0.5 = $1,728.

Anne LLC Purchased Computer Equipment (5-Year Property)on August 29 for $30,000