Hazel purchased a new business asset (five-year asset)on September 30,2014,at a cost of $100,000.On October 4,2014,Hazel placed the asset in service.This was the only asset Hazel placed in service in 2014.Hazel did not elect § 179 or additional firstyear depreciation if available.On August 20,2015,Hazel sold the asset.Determine the cost recovery for 2015 for the asset.
A)$14,250
B)$19,000
C)$23,750
D)$38,000
E)None of these

Question

Hazel purchased a new business asset (five-year asset)on September 30,2014,at a cost of $100,000.On October 4,2014,Hazel placed the asset in service.This was the only asset Hazel placed in service in 2014.Hazel did not elect § 179 or additional first­year depreciation if available.On August 20,2015,Hazel sold the asset.Determine the cost recovery for 2015 for the asset.
A)$14,250
B)$19,000
C)$23,750
D)$38,000
E)None of these

Quizplus · Accepted Answer

The asset was placed in service in October 2014;hence,the mid-quarter convention is used.2015 is the second year of cost recovery.($100,000)× .38 × (2.5/4)= $23,750.

Hazel Purchased a New Business Asset (Five-Year Asset)on September 30,2014,at