Shannon purchases equipment classified as 3-year property on December 19, 2018, at a cost of $100,000. Section 179 is not elected and an election is made not to take bonus depreciation and Shannon does not use the straight-line method. Shannon purchased no other depreciable property in 2018. What is the amount of the MACRS depreciation deduction for 2018?

Question

Quizplus · Accepted Answer

Because Shannon did not elect to take Section 179 or bonus depreciation, the MACRS depreciation deduction must be calculated using the Modified Accelerated Cost Recovery System. Since Shannon purchased the equipment in December, it is assumed to be placed in service halfway through the year, so only half of the annual depreciation deduction is allowed for 2018. Using the MACRS tables for 3-year property and assuming the equipment is not used for a large portion of business use, the depreciation deduction for 2018 would be $8,330.

Shannon Purchases Equipment Classified as 3-Year Property on December 19