Anne LLC purchased computer equipment (5-year property) on August 29 with a basis of $30,000 and used the half-year convention. During the current year, which is the fourth year Anne LLC owned the property, the property was disposed of on January 15. Calculate the maximum depreciation expense:
A) $432
B) $1,728
C) $1,874
D) $3,456
E) None of these

Question

Quizplus · Accepted Answer

In the fourth year, using the half-year convention, the depreciation is calculated as half of the regular fourth-year depreciation. The regular fourth-year depreciation for 5-year property is 11.52%, so half of that is 5.76%. Therefore, $30,000 * 5.76% = $1,728.

Anne LLC Purchased Computer Equipment (5-Year Property) on August 29