On March 23,2016,Saturn Investments Corporation purchases a $5,000 computer (5-year property)for business-use.On November 27,2016,it pays $4,000 for new office furniture (7-year property).It does not wish to use the Section 179 election to expense.How much depreciation may Saturn deduct on the computer for 2016?

Question

Quizplus · Accepted Answer

For the computer, since it is 5-year property, the MACRS depreciation rates for Year 1 is 20%. Thus, the depreciation deduction for 2016 would be:

$5,000 x 20% = $1,000

For the office furniture, since it is 7-year property, the MACRS depreciation rates for Year 1 is 14.29%. Thus, the depreciation deduction for 2016 would be:

$4,000 x 14.29% = $571.60

Therefore, the total depreciation deduction for 2016 would be:

$1,000 + $571.60 = $1,571.60

Since the options do not include this exact amount, the closest one is B) $1,750.

On March 23,2016,Saturn Investments Corporation Purchases a $5,000 Computer (5-Year