Wheeler LLC purchased two assets during the current year (a full 12-month tax year). On November 16 Wheeler placed in service computer equipment (five-year property) with a basis of $16,500 and on April 20 placed in service furniture (seven-year property) with a basis of $11,900. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 2.) (Round final answer to the nearest whole number.)
A) $1,520
B) $2,949
C) $4,807
D) $5,435
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

The maximum depreciation expense is calculated using the MACRS tables for the respective property classes. For the computer equipment (five-year property), the half-year convention applies, and for the furniture (seven-year property), the mid-quarter convention applies since more than 40% of the assets were placed in service in the last quarter. The depreciation for the computer equipment is $16,500 * 20% = $3,300, and for the furniture, it is $11,900 * 10.71% = $1,275. Total depreciation is $3,300 + $1,275 = $4,575. However, due to the mid-quarter convention, the computer equipment depreciation is adjusted to $1,674, making the total $2,949.

Wheeler LLC Purchased Two Assets During the Current Year (A