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6 March, 14:04

James purchased a new business asset (three-year personalty) on July 23, 2017, at a cost of $40,000. James takes additional first-year depreciation but does not elect Section 179 expense on the asset. Determine the cost recovery deduction for 2017

a. $8,333

b. $26,666

c. $33,333

d. $41,665

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  1. 6 March, 16:47
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    b. $26,666

    Explanation:

    Additional first-year depreciation = 40000*0.5 = 20000

    MACRS cost recovery = (40000-20000) * 0.3333 = 6666

    Total cost recovery deduction for 2017 = 20000+6000 = 26666
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