Convers Corporation (June 30 year-end) acquired the following assets during the
ID: 2562220 • Letter: C
Question
Convers Corporation (June 30 year-end) acquired the following assets during the current tax year (ignore §179 expense and bonus depreciation for this problem):
Asset
Placed in
Service Date
Original
Basis
Machinery
October 25
$60,000
Computer Equipment
February 3
$10,000
Used Delivery Truck*
March 17
$23,000
Furniture
April 22
$140,000
Total
$233,000
*The delivery truck is not a luxury automobile.
What is the allowable MACRS depreciation on Convers’ property in the current year?
Asset
Placed in
Service Date
Original
Basis
Machinery
October 25
$60,000
Computer Equipment
February 3
$10,000
Used Delivery Truck*
March 17
$23,000
Furniture
April 22
$140,000
Total
$233,000
Explanation / Answer
1 2 1*2 Asset Placed in Service Date Quarter Original Basis Rate Depreciation Machinery ( 7 year) Oct-25 2nd 60,000 17.85% 10710 Computer Equipment ( 5 year) Feb-03 3rd 10,000 15.00% 1500 Used Delivery Truck*(5 year) Mar-17 3rd 23,000 15.00% 3450 Furniture( 7 year) Apr-22 4th 1,40,000 3.57% 4998 Total 2,33,000 20658 $20658, under the mid-quarter convention, as computed below.Convers is required to use themid-quarter convention because greater than 40 percent of tangible personal property wasplaced in service during its 4thquarter.Convers placed 60% [$140,000 / ($60,000 + $10,000+ $23,000 + $140,000)] of its tangible personal property in service during the 4th quarter (April– June)
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