On May 26,2012,Jamal purchased machinery for $30,000 to be used in his business.He did not elect to expense the equipment under §179 or the bonus.On October 10,2016,he sells the machinery to a scrap metal dealer.What is his cost recovery deduction for 2016 rounded to the nearest dollar?
A)$1,340.
B)$2,679.
C)$4,287.
D)$0.

Question

Quizplus · Accepted Answer

The machinery is 7-year property, and Jamal uses the half-year convention. He can take a half-year of depreciation in the year of sale. The MACRS rate for the 7th year is 8.93%, so the deduction is $30,000 * 8.93% = $2,679. However, since it's a half-year convention, he only takes half of that, which is $1,340.

On May 26,2012,Jamal Purchased Machinery for $30,000 to Be Used