Wu Copy Shop purchases a new copy machine in July 2013 for $30,000.No other depreciable assets are placed in service in 2013.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 2013?
A)$1,500
B)$3,000
C)$4,500
D)$5,400
E)$6,000

Question

Quizplus · Accepted Answer

The Alternative Depreciation System (ADS) for a copy machine typically uses a 9-year recovery period. For 2013, using the straight-line method, the depreciation would be $30,000/9 = $3,333.33 annually. Since the machine was placed in service in July, only half a year's depreciation is taken for 2013, which is $3,333.33/2 = $1,666.67. However, the closest option is $1,500, which suggests a rounding or specific tax rule adjustment.

Wu Copy Shop Purchases a New Copy Machine in July