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.

Question

Warren Blake

Business

12 November, 01:04

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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Answers (1)

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America · Answer 1

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.