Terrance Inc., a calendar year taxpayer, purchased equipment for $2,765,000 and placed it in service on March 4, 2015. The equipment was seven-year recovery property and was the only depreciable asset that Terrance purchased during 2015.
a. Compute Terrance's tax depreciation with respect to the equipment for 2015 and 2016.
b. Compute Terrance's adjusted basis in the equipment in December 31, 2016.
c. How would your answer to a. change if Terrance placed the equipment in service in 2014 instead of 2015?

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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, 2015. The equipment was seven-year recovery property and was the only depreciable asset that Terrance purchased during 2015.
a. Compute Terrance's tax depreciation with respect to the equipment for 2015 and 2016.
b. Compute Terrance's adjusted basis in the equipment in December 31, 2016.
c. How would your answer to a. change if Terrance placed the equipment in service in 2014 instead of 2015?