Question

Calculate the maximum tax year 2019 depreciation deduction allowable for property that is properly classified as new five year property and is not an automobile. The taxpayer is a calendar year taxpayer and placed the property into service on June 1, 2019. The property was acquired for $97,000 and the taxpayer did not elect bonus depreciation or section 179 expensing. The taxpayer placed no other depreciable property into service in 2019

Answer 1

Depreciation deduction for tax year 2019 = 19,400

Computation

97000/5 = 19,400

*in question not specified about method of depreciation hence used straight line method

The half-year convention for depreciation allows companies to better match revenues and expenses in the year they are incurred by depreciating only half of the typical annual depreciation expense in year one if the asset is purchased in the middle of the year

In the above case middle of the year will be july 1 and asset started using by june 1 hence half year convention not applicable