James purchased a new business asset (three-year personality)on July 23,2010,at a cost of $50,000.He did not elect to expense any of the asset under § 179,nor did he elect straight-line cost recovery.If Congress reenacts additional first-year depreciation for 2010,James did elect not to take additional first-year depreciation.Determine the cost recovery deduction for 2010.

Question

Quizplus · Accepted Answer

Without additional first-year depreciation, the cost recovery deduction for 2010 would be calculated using the MACRS 200% declining balance method with a half-year convention. Therefore, the deduction would be ($50,000 x 0.20) = $10,000 for the first year. However, since James did not elect straight-line cost recovery, the deduction is doubled to $20,000 for the first year.

James Purchased a New Business Asset (Three-Year Personality)on July 23,2010,at