Question

Debra acquired the following new assets during 2019. Date Asset Cost April 11 July 28 November...

Debra acquired the following new assets during 2019.

Date Asset Cost

April 11

July 28

November 3

Furniture

Trucks

Computers

$40,000

40,000

70,000

Determine Debra’s cost recovery deductions for the current year. Debra does not elect immediate expensing under § 179. She does not claim any available additional first-year depreciation.

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Answer #1

In the given case, computers as acquired in the fourth quarter exceeds 40% of the cost of all personal property acquired during the year = 70,000/150,000 = 46.67%. Hence, as per provisions, mid-quarter convention shall be used.

Asset

MACRs Workings

Amount

Furniture (7-year class)

$40,000 x .1785 (placed in 2nd quarter)

8925

Trucks (5-year class)

$40,000 x .15 (placed in 3rd quarter)

4500

Computers (5-year class)

$70,000 x .05 (placed in 4th quarter)

3000

Total cost recovery

16,425

The rates has been taken from mid-quarter convention tables

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