Suvi, Inc. purchased two assets during the current year (a full 12-month tax year). Suvi placed in service computer equipment (5-year property) on August 10 with a basis of $20,000 and machinery (7-year property) on November 18 with a basis of $10,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 1) (Round final answer to the nearest whole number.)
A) $857.
B) $3,357.
C) $5,429.
D) $6,000.
E) None of the choices are correct.

Question

Suvi, Inc. purchased two assets during the current year (a full 12-month tax year). Suvi placed in service computer equipment (5-year property) on August 10 with a basis of $20,000 and machinery (7-year property) on November 18 with a basis of $10,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 1) (Round final answer to the nearest whole number.)
A) $857.
B) $3,357.
C) $5,429.
D) $6,000.
E) None of the choices are correct.

Quizplus · Accepted Answer

The half-year convention applies. The calculations are $20,000 × 0.20 = $4,000 and $10,000 × 0.1429 = $1,429. The total is $5,429 ($4,000 + $1,429).

Suvi, Inc Purchased Two Assets During the Current Year (A Full