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15 April, 19:55

An asset (not an automobile) put in service in June 2019 has a depreciable basis of $1,035,000, a recovery period of 5 years, and is the only asset placed in service during the year. Assuming bonus depreciation is used, a half-year convention, and the expensing election is made, what is the maximum amount of cost that can be deducted in 2019 (assume no income limitation)

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  1. 15 April, 20:02
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    The maximum deduction is $207,000.

    Explanation:

    As per MACRS depreciation table 5 years half year conversion depreciation rate for first year is 20% - 100%/5 = 20%

    The maximum deduction is $1,035,000 * 20% = $207,000
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