Cruz Copy Shop purchases a new copy machine in July 2016 for $30,000.No other depreciable assets are placed in service in 2016.Since Cruz Copy Shop expects to be in a much higher tax bracket in future years,it desires to minimize its current cost recovery amount to the fullest extent possible.What is the amount of Cruz Copy Shop's MACRS straight-line depreciation for 2016?
A)$1,500
B)$2,143
C)$3,000
D)$3,213
E)$4,500

Question

Quizplus · Accepted Answer

The MACRS straight-line depreciation for 2016 is calculated as follows: 
- Determine the MACRS depreciation rate for 5-year property (copy machine) in Table A-1: 20%
- Apply the half-year convention since the asset was placed in service in July.
Depreciation for 2016 = $30,000 x 20% x 50% = $3,000. 
Therefore, choice C is the correct answer.

Cruz Copy Shop Purchases a New Copy Machine in July