Beth's business purchased only one asset during the current year (a full 12-month tax year). On December 1 Beth placed in service machinery (seven-year property) with a basis of $52,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 2.)(Round final answer to the nearest whole number.)Multiple Choice$1,856$2,600$7,429$10,400None of the choices are correct. TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarterDepreciation Rate for Recovery Period5-Year7-YearYear 135.00%25.00%Year 226.0021.43Year 315.6015.31Year 411.0110.93Year 511.018.75Year 61.388.74Year 78.75Year 81.09TABLE 2b MACRS Mid-Quarter Convention: For property placed in service during the second quarterDepreciation Rate for Recovery Period5-Year7-YearYear 125.00%17.85%Year 230.0023.47Year 318.0016.76Year 411.3711.97Year 511.378.87Year 64.268.87Year 78.87Year 83.34TABLE 2c MACRS Mid-Quarter Convention: For property placed in service during the third quarterDepreciation Rate for Recovery Period5-Year7-YearYear 115.00%10.71%Year 234.0025.51Year 320.4018.22Year 412.2413.02Year 511.309.30Year 67.068.85Year 78.86Year 85.53TABLE 2d MACRS-Mid Quarter Convention: For property placed in service during the fourth quarterDepreciation Rate for Recovery Period5-Year7-YearYear 15.00%3.57%Year 238.0027.55Year 322.8019.68Year 413.6814.06Year 510.9410.04Year 69.588.73Year 78.73Year 87.64

Solution:- Calculation of the maximum depreciation expenses as follows under:-

Beth's business purchased only one asset during the current year (a full 12-month tax year). On December 1 Beth placed in service machinery (seven- year property) with a basis of $52,000. Calculate the maximum depreciation expense (ignoring $179 and bonus depreciation). (Use MACRS Table 2.) (Round final answer to the nearest whole number.) Multiple Choice $1,856 $2,600

Beth's business purchased only one asset during the current year (a full 12-month tax year). On December 1 Beth placed in service machinery (seven- year property) with a basis of $52,000. Calculate the maximum depreciation expense (ignoring $179 and bonus depreciation). (Use MACRS Table 2.) (Round final answer to the nearest whole number.) Multiple Choice $1,856 $2,600

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 51P

See similar textbooks

Similar questions

Cox Construction, a company in its 10th year of business, purchased a piece of equipment on April 1, year 9, for 20,000. Cox has used it for business purposes since the initial purchase date. The company depreciated the equipment using the MACRS half-year table for 5-year assets. For tax purposes, what is the amount of accumulated depreciation expense for the equipment as of December 31, year 10? a. 6,000 b. 10,400 c. 11,600 d. 12,800
Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.
Michael Sima, a sole proprietor craftsman, purchased an amount of equipment in the current year that exceeded the maximum allowable 179 depreciation election limit by 20,000. Simas total purchases of property placed in service in the current year did not exceed the limit imposed by 179. All of the property (including the equipment) was purchased in November of the current year, and Sima elected to depreciate the maximum amount of equipment under 179. Sima had bottom-line Schedule C income of 50,000 in the current year. Which method may Sima use to depreciate the remaining equipment in the current year? a. Sima may not depreciate any additional equipment other than the 179 maximum in the current year and must carry forward the excess amount to use in the following taxable year. b. MACRS half-year convention for personal property. c. MACRS mid-quarter convention for personal property. d. Straight-line, mid-month convention over 27.5 years for real property.
James purchased office equipment for his business. The equipment has a depreciable basis of $7,000 and was put in service on June 1,2019. James decides to elect straightline depreciation under MACRS for the asset over the minimum number of years (7 years), and does not use bonus depreciation or make the election to expense. What is the amount of his depreciation deduction for the equipment for the 2019 tax year? $2,000 $1,000 $500 $0 None of the above
Stem Corp. bought a machine in February of year 7 for 20,000. Then Stem bought furniture in November of year 7 for 30,000. Both machines were placed in service for business purposes immediately after purchase. No other assets were purchased during year 7. What depreciation convention must Stem use for the machine purchased in February year 7? a. Mid-month b. Half-year c. Mid-quarter d. Full-year
Turnip Company purchased an asset at a cost of 10,000 with a 10-year life during the current year. Turnip uses differing depreciation methods for financial reporting and income tax purposes. The depreciation expense during the current year for financial reporting is 1,000 and for income tax purposes is 2,000. Turnip is subject to a 30% enacted future tax rate. Prepare a schedule to compute Turnips (a) ending future taxable amount, (b) ending deferred tax liability, and (c) change in deferred tax liability (deferred tax expense) for the current year.