Beth's business purchased only one asset during the current year. Beth placed in service machinery (7-year property) on December 1 with a basis of $50,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation):
A) $1,785
B) $2,500
C) $7,145
D) $10,000
E) None of these

Question

Quizplus · Accepted Answer

The maximum depreciation expense is calculated using the MACRS half-year convention for 7-year property. For property placed in service in December, only half of the first year's depreciation is allowed. The first-year rate for 7-year property is 14.29%, so $50,000 x 14.29% x 0.5 = $1,785.

Beth's Business Purchased Only One Asset During the Current Year