Pat purchased a used five-year class asset on March 15, 2012, for $60,000.He did not elect § 179 expensing.Determine the cost recovery deduction for 2012 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

For a five-year class asset, the MACRS depreciation method applies. In the first year, the half-year convention is used, so the depreciation rate is 20%. Therefore, the cost recovery deduction is 20% of $60,000, which is $12,000.

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