Question

Alice purchased office furniture on September 20, 2016, for $100,000. On October 10, 2016, she purchased business computers for $80,000. Alice placed all of the assets in service on January 15, 2017. Alice did not elect to expense any of the assets under § 179, did not elect straight-line cost recovery, and did not take additional first-year depreciation. Determine the cost recovery deduction for the business assets for 2017.
a. $6,426
b. $14,710
c. $25,722
d. $30,290
e. None of the above

Answer 1

Answer:

d. $30,290

Explanation:

The half-year convention applies.

Regular MACRS

Furniture (seven-year property)  = $100,000 × 0.1429

                                                     = $14,290

Computers (five-year property)  = $80,000 × 0.20

                                                    = $16,000

Total cost recovery = $14,290 + $16,000  

                                 = $30,290

Therefore, The cost recovery deduction for the business assets for 2017 is $30,290.