Cobly Company, a calendar year taxpayer, made only one asset purchase this year: machinery costing $1,932,500. The machinery is 7-year recovery property, and Cobly placed it in service on October 12. How many months of MACRS depreciation on the machinery is Cobly allowed this year?
A) Six months
B) Two and one-half months
C) One and one-half months
D) None of these choices are correct

Question

Quizplus · Accepted Answer

Since the machinery was placed in service on October 12, Cobly is only allowed to take MACRS depreciation for the number of months it was in service during the year. There are 2.5 months remaining in the year after October 12, so Cobly is allowed to take 1.5 months of MACRS depreciation on the machinery this year.

Cobly Company, a Calendar Year Taxpayer, Made Only One Asset