Question

Bonnie purchased a new business asset (five-year property) on March 10, 2018, at a cost of...

Bonnie purchased a new business asset (five-year property) on March 10, 2018, at a cost of $30,000. She also purchased a new business asset (seven-year property) on November 20, 2018, at a cost of $13,000. Bonnie did not elect to expense either of the assets under § 179, nor did she elect straight-line cost recovery. Bonnie takes additional first-year depreciation. Determine the cost recovery deduction for 2018 for these assets.

a.

$7,858

b.

$9,586

c.

$21,915

d.

$43,000

e.

None of the above

=

James purchased a new business asset (three-year personalty) on July 23, 2018, at a cost of $40,000. James takes additional first-year depreciation but does not elect Section 179 expense on the asset. Determine the cost recovery deduction for 2018.

a.

$8,333

b.

$26,666

c.

$33,333

d.

$40,000

e.

None of the above

Homework Answers

Answer #1

1)

As Per Section 179, Business can take full depreciation for the New investment (made in 2018 )in the asset up to a limit of $1,000,000.

Since,Bonnies invested $43,000 only in the year 2018, he can take total amount as deduction under section 179.

Therefore option (d) is correct

2)

Additional first-year depreciation 20000 =40000*0.5
MACRS cost recovery 6666 =(40000-20000)*0.3333
Total cost recovery deduction for 2017 26666

Therefore option (b) is correct

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