Terrance Inc., a calendar year taxpayer, purchased equipment for $2,765,000 and placed it in service on March 4, 2010. The equipment was seven-year recovery property and was the only depreciable asset that Terrance purchased during 2010.
a. Compute Terrance's tax depreciation with respect to the equipment for 2010 and 2011.
b. Compute Terrance's adjusted basis in the equipment in December 31, 2011.
c. How would your answer to a. change if Terrance placed the equipment in service on November 18 instead of March 4?

Question

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The Answer of Terrance Inc., a calendar year taxpayer, purchased equipment for $2,765,000 and placed it in service on March 4, 2010. The equipment was seven-year recovery property and was the only depreciable asset that Terrance purchased during 2010.
a. Compute Terrance's tax depreciation with respect to the equipment for 2010 and 2011.
b. Compute Terrance's adjusted basis in the equipment in December 31, 2011.
c. How would your answer to a. change if Terrance placed the equipment in service on November 18 instead of March 4?