A taxpayer places a $50,000 5-year recovery period asset in service in 2016. This is the only asset placed in service in 2016. Assuming half-year convention, no election to expense and no income limitation, what is the amount of total cost recovery deduction?

Question

A taxpayer places a $50,000 5-year recovery period asset in service in 2016. This is the only asset placed in service in 2016. Assuming half-year convention, no election to expense and no income limitation, what is the amount of total cost recovery deduction?​

Quizplus · Accepted Answer

Using the half-year convention and the MACRS 5-year recovery period, the taxpayer can deduct a portion of the asset's cost each year. Over 5 years, the total cost recovery deduction would be $30,000.

A Taxpayer Places a $50,000 5-Year Recovery Period Asset in Service