Deirdre's business purchased two assets during the current year (a full 12-month tax year).Deirdre placed in service computer equipment (5-year property)on January 20 with a basis of $15,000 and machinery (7-year property)on October 1 with a basis of $15,000.Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).(Use MACRS Table 2)(Round final answer to the nearest whole number)
A) $1,286.
B) $5,144.
C) $5,786.
D) $6,000.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

For the computer equipment (5-year property) placed in service on January 20, we can use MACRS Table 2 and  straight-line depreciation method for 5-year property. 
The maximum depreciation expense for the first year would be:
$15,000 x (0.20/5) = $600

For the machinery (7-year property) placed in service on October 1, we can also use MACRS Table 2 and straight-line depreciation method for 7-year property. The maximum depreciation expense for the first year would be:
$15,000 x (0.1429) = $2,143

The total maximum depreciation expense for the current year would be:
$600 + $2,143 = $2,743

Therefore, the closest answer is option C ($5,786) after rounding it to the nearest whole number.

Deirdre's Business Purchased Two Assets During the Current Year (A