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12 June, 01:41

In 2019, Muhammad purchased a new computer for $16,000. The computer is used 100% for business. Muhammad did not make a $179 election with respect to the computer. He does not claim any available additional first-year depreciation.

Required:

1. If Muhammad uses the MACRS statutory percentage method, determine his cost recovery deduction for 2019 for computing taxable income and for computing his alternative minimum tax.

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  1. 12 June, 04:02
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    Answer: His cost deduction would be $3,200

    Explanation:

    Without the mid-quarter convention Muhammad's 2019 MACRS deduction would be $3,200 ($16,000 x. 20). The mid-quarter convention slows down the taxpayers available cost recovery deduction.
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