In June 2014,Kelly purchased new equipment for $26,000 to be used in her business.Assuming Kelly has net income from her business of $75,000 prior to the deduction,what is the maximum amount of cost recovery Kelly can deduct rounded to the nearest dollar,assuming she does not elect §179 expense or bonus depreciation?

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The maximum amount of cost recovery Kelly can deduct is based on the Modified Accelerated Cost Recovery System (MACRS) for 5-year property. For the first year, the deduction is 14.29% of the cost, which is $26,000 * 14.29% = $3,715.

In June 2014,Kelly Purchased New Equipment for $26,000 to Be