Pat purchased a used five-year class asset on March 15,2016,for $60,000.He did not elect § 179 expensing.Determine the cost recovery deduction for 2016 for earnings and profits purposes.
A)$2,000
B)$3,000
C)$6,000
D)$12,000
E)None of the above

Question

Quizplus · Accepted Answer

The asset is a five-year class asset, meaning it has a recovery period of five years for tax purposes. The cost recovery deduction for 2016 is calculated using the MACRS method, using a half-year convention, and a mid-month convention for the month of purchase. The resulting deduction is $6,000.

Pat Purchased a Used Five-Year Class Asset on March 15,2016,for