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?
A) Six months
B) Two and one-half months
C) One and one-half months
D) None of the above

Question

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? 
A) Six months
B) Two and one-half months
C) One and one-half months
D) None of the above

Quizplus · Accepted Answer

The midquarter convention applies because Cobly placed more than 40% (100%) of its depreciable personalty into service in the fourth quarter.

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