Sairra,LLC purchased only one asset during the current year.It placed in service furniture (7-year property) on April 16 with a basis of $25,000.Calculate the maximum depreciation expense for the current year,rounding to a whole number (ignoring §179 and bonus depreciation) :
A)$1,786
B)$3,573
C)$4,463
D)$5,000
E)None of these

Question

Quizplus · Accepted Answer

The maximum depreciation expense for furniture (7-year property) is calculated using the MACRS depreciation method. Since the furniture was placed in service on April 16, it is considered to have been placed in service in the mid-month convention. The depreciation rate for 7-year property placed in service in the mid-month convention using the MACRS depreciation method is 14.29%. Therefore, the maximum depreciation expense for the current year is:

$25,000 x 14.29% = $3,572.50

Rounding to a whole number gives us $3,573. Therefore, the answer is B.

Sairra,LLC Purchased Only One Asset During the Current Year