Alice purchased office furniture on September 20, 2012, for $100,000.On October 10, she purchased business computers for $80,000.Alice did not elect to expense any of the assets under § 179, nor did she elect straight-line cost recovery. She did not take additional first-year depreciation. Determine the cost recovery deduction for the business assets for 2012.

Question

Quizplus · Accepted Answer

The office furniture is 7-year property and the computers are 5-year property. Using the half-year convention and the MACRS tables, the cost recovery for the furniture is $100,000 x 14.29% = $14,290 and for the computers is $80,000 x 20% = $16,000. Total cost recovery is $14,290 + $16,000 = $30,290. However, since Alice did not elect any special depreciation methods, the correct deduction is $14,710 for the first year.

Alice Purchased Office Furniture on September 20, 2012, for $100,000