Chestnut Furniture Company purchases a delivery van on June 14,2017,at a cost of $30,000.The delivery van has a 5-year MACRS life and an ADS recovery period of 5 years.What is Chestnut's minimum cost recovery deduction on the van in 2017?

Question

Quizplus · Accepted Answer

The correct answer is B because the minimum cost recovery deduction for the van in 2017 is $3,000. This is because the van has a 5-year MACRS life and an ADS recovery period of 5 years. The MACRS depreciation rate for the first year is 20%, so the depreciation deduction for the first year is $30,000 x 20% = $6,000. However, the minimum cost recovery deduction for the first year is $3,000, so the depreciation deduction for the first year is limited to $3,000.

Chestnut Furniture Company Purchases a Delivery Van on June 14,2017,at