Alice purchased office furniture on September 20, 2018, for $100,000. On October 10, 2018, she purchased business computers for $80,000. Alice placed all of the assets in service on January 15, 2019. She did not elect to expense any of the assets under § 179, did not elect straight-line cost recovery, and did not take additional first-year depreciation. Determine the cost recovery deduction for the business assets for 2019.

Question

Kujo

Business

2 May, 19:20

Alice purchased office furniture on September 20, 2018, for $100,000. On October 10, 2018, she purchased business computers for $80,000. Alice placed all of the assets in service on January 15, 2019. She did not elect to expense any of the assets under § 179, did not elect straight-line cost recovery, and did not take additional first-year depreciation. Determine the cost recovery deduction for the business assets for 2019.

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Answers (1)

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Osvaldo Orr · Answer 1

The correct answer is $30,290.

Explanation:

According to the scenario, the computation can be done as follows:

This applies regular MACRs

So, As furniture is the Seven year property,

So, the cost recovery deduction for the furniture = $100,000 *.1429

= $14,290

And The computer is a five year asset

So, the cost recovery deduction for the Computer = $80,000 *.20

= $16,000

So, Total Cost recovery deduction = Cost of recovery deduction for furniture + cost of recovery deduction for computer

= $14,290 + $16,000

= $30,290

Hence, the cost recovery deduction for the business assets for 2019 is $30,290.