Question

Shannon purchased some used equipment for her business in November of last year. She originally purchased the equipment for 17,298 but can now sell it for 19,381. She did not elect Bonus depreciation but did elect 5,000 of 179 depreciation. Calculate Shannon's depreciation for her equipment this year.

Answer 1

We know that, life of an equipment under MACRS is 7 years.

Purchase cost = $17,298

Purchase cost	$      17,298
Less Sec 179 Depreciation	$       (5,000)
Balance	$      12,298
Less: MACRS Depreciation @ 14.29% (Half year convention)	$       (1,757)
Carrying Value at the beginning of this year	$      10,541
Less: MACRS Depreciation @ 24.49% * 1/2 (Half year convention)	$       (1,506)
Carrying Value of the equipment	$        9,035

Therefore depreciation for the current year would be $1506

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