On July 15,2014,Travis purchased some office furniture for $20,000 to be used in his business.He did not elect to expense the equipment under §179 or bonus.On December 15,2016,he sells the equipment.What is his cost recovery deduction for 2016?

Question

Quizplus · Accepted Answer

The equipment is 7-year property, and the half-year convention applies. For the third year (2016), the MACRS depreciation rate is 14.29%. The cost recovery deduction is $20,000 * 14.29% = $2,858. However, since the equipment was sold before the end of the year, the mid-quarter convention applies, and the deduction is halved, resulting in $1,749.

On July 15,2014,Travis Purchased Some Office Furniture for $20,000 to Be