n March 5, 2014, Dan purchased and placed in service a 7-year class asset costin

Question

n March 5, 2014, Dan purchased and placed in service a 7-year class asset costing $728,400.

Compute the maximum deductions that Dan can claim with respect to this asset in 2014 and 2015.

Note: If required round your intermediate computations and final answers to the nearest dollar. Assume that the 2014 additional first-year depreciation and § 179 amounts are extended to 2015.

Dan's total cost recovery deduction for 2014 is $ _____ .

Dan's total cost recovery deduction for 2015 is $ _____.

MACRS Accelerated Depreciation for Personal Property Assuming Half-Year Convention EXHIBIT 8.4 For Property Placed in Service after December 31, 1986 20-Year (150% DB) 3.750 7.219 6.677 10-Year (200% DB) 10.00 18.00 14.40 11.52 9.22 7.37 6.55* 6.55 6.56 6.55 3.28 15-Year ( 150% DB) 5.00 9.50 8.55 7.70 6.93 6.23 5.90* 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95 3-Year (200% DB) 33.33 44.45 14.81 7.41 5-Year (200% DB) 20.00 32.00 19.20 11.52 11.52 5.76 7-Year (200% DB) 14.29 24.49 17.49 12.49 Recovery Year 4 5.713 5.285 4.888 4.522 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 8.93* 8.92 8.93 4.46 10 12 13 15 16 17 18 19 20 21 Switchover to straight-line depreciation.

Explanation / Answer

Solution:

2014:

Section 179 expense..........................500000

Additional first year depreciation.........114200

[(728400-500000)*.50]

MACRS cost recovery......................16319.18

[(728400-500000-114200)* .1429]

Total deduction...............................630519.18

2015:

Section 179 expense.................... 0

Additional first year depreciation....0

MACRS cost recovery..................

[(728400-500000-114200)*.2449.....27967.58

Total deduction...........................27967.58

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