Wu Copy Shop purchases a new copy machine in July 2016 for $30,000.No other depreciable assets are placed in service in 2016.Since Wu 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 Wu Copy Shop's ADS depreciation for 2016?
A)$1,500
B)$3,000
C)$4,500
D)$5,400
E)$6,000

Question

Quizplus · Accepted Answer

The ADS (Alternative Depreciation System) for non-residential property like a copy machine is typically 15 years. For 2016, the depreciation would be calculated as $30,000 / 15 = $2,000. However, since the machine was placed in service in July, only half-year depreciation applies, resulting in $1,500 for 2016.

Wu Copy Shop Purchases a New Copy Machine in July