Bonnie purchased a new business asset (five-year property)on March 10,2010,at a cost of $20,000.She also purchased a new business asset (seven-year property)on November 20,2010,at a cost of $13,000.Bonnie did not elect to expense either of the assets under § 179,nor did she elect straight-line cost recovery.If Congress reenacts additional first-year depreciation for 2010,Bonnie did elect not to take additional first-year depreciation.Determine the cost recovery deduction for 2010 for these assets.

Question

Quizplus · Accepted Answer

The cost recovery deduction for 2010 is calculated using the Modified Accelerated Cost Recovery System (MACRS) without additional first-year depreciation. For the five-year property, the half-year convention applies, and the deduction is 20% of $20,000, which is $4,000. For the seven-year property, the deduction is 14.29% of $13,000, which is $1,858. The total deduction is $4,000 + $1,858 = $5,858.

Bonnie Purchased a New Business Asset (Five-Year Property)on March 10,2010,at