An asset (not an automobile) placed in service in June 2016 has a depreciable basis of $35,000 and a recovery period of 5 years. Assuming bonus depreciation is used, a half-year convention, and no expensing election, what is the maximum amount of cost that can be deducted in 2016?

Question

An asset (not an automobile) placed in service in June 2016 has a depreciable basis of $35,000 and a recovery period of 5 years. Assuming bonus depreciation is used, a half-year convention, and no expensing election, what is the maximum amount of cost that can be deducted in 2016?​

Quizplus · Accepted Answer

In 2016, bonus depreciation allowed for 50% of the cost to be deducted immediately. Thus, $35,000 x 50% = $17,500. The remaining $17,500 is depreciated over 5 years using the half-year convention, resulting in an additional $3,500 deduction for 2016. Total deduction: $17,500 + $3,500 = $21,000.

An Asset (Not an Automobile) Placed in Service in June