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 $70,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 2.) (Round final answer to the nearest whole number.)
A) $2,499
B) $3,500
C) $10,001
D) $14,000
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

Using the MACRS Table 2 for seven-year property, the first-year depreciation rate is 14.29%. However, since the machinery was placed in service in December, only 1.5 months of depreciation can be taken for the first year. This is calculated as 14.29% of $70,000, prorated for 1.5/12 months = $70,000 * 14.29% * (1.5/12) = $1,249.58, rounded to the nearest whole number is $2,499.

Beth's Business Purchased Only One Asset During the Current Year