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10 November, 11:13

Beth's business purchased only one asset during the current year (a full 12-month tax year). Beth placed in service machinery (7-year property) on December 1 with a basis of $50,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).

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  1. 10 November, 14:07
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    the depreciation expense on the equipment will be 1,785 for tax purpose.

    Explanation:

    We will look into the MACRS (Modified Accelerated Cost Recovery System)

    table for a property of seven years placen into service in the 4th quarter:

    Which give us 3.57%

    now we multiply the basis by the coefficient and get the value for depreciation

    50,000 x 3.57% = 1,785 depreciation expense under MACRS
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