Wheeler LLC purchased two assets during the current year (a full 12-month tax year). Wheeler placed in service computer equipment (5-year property) on November 16 with a basis of $15,000 and furniture (7-year property) on April 20 with a basis of $11,000. Calculate the maximum depreciation expense, rounding to a whole number (ignoring §179 and bonus depreciation):
A) $1,285
B) $2,714
C) $4,572
D)$5,200
E)None of these

Question

Quizplus · Accepted Answer

The maximum depreciation expense is calculated using the MACRS half-year convention. For the computer equipment (5-year property), the first-year rate is 20%, so $15,000 x 20% = $3,000. For the furniture (7-year property), the first-year rate is 14.29%, so $11,000 x 14.29% = $1,571. Total depreciation is $3,000 + $1,571 = $4,571, which rounds to $4,572.

Wheeler LLC Purchased Two Assets During the Current Year (A