An asset is in the MACRS 5-year property class and is being depreciated using th
ID: 2581328 • Letter: A
Question
An asset is in the MACRS 5-year property class and is being depreciated
using the MACRS tables. The tax rate is 30%. The depreciation deduction
for this asset in year 2 totaled $12,800.
Calculate the depreciation deduction for this asset in year 4. Do not
use decimals in your answer.
You will need to use the percentages from the MACRS tables posted below
to answer this question.
PERCENTAGES FROM THE MACRS TABLE
MACRS PROPERTY CLASS
Year
3-Year
5-Year
7-Year
1
33.33%
20.00%
14.29%
2
44.45%
32.00%
24.49%
3
14.81%
19.20%
17.49%
4
7.41%
11.52%
12.49%
5
-----
11.52%
8.93%
6
-----
5.76%
8.92%
7
-----
-----
8.93%
8
-----
-----
4.46%
MACRS PROPERTY CLASS
Year
3-Year
5-Year
7-Year
1
33.33%
20.00%
14.29%
2
44.45%
32.00%
24.49%
3
14.81%
19.20%
17.49%
4
7.41%
11.52%
12.49%
5
-----
11.52%
8.93%
6
-----
5.76%
8.92%
7
-----
-----
8.93%
8
-----
-----
4.46%
Explanation / Answer
1) Calculation of 4th year depreciation on the asset :
2nd year Depreciation = $12,800
2nd year Depreciation rate for the 5 year class asset = 32%
Cost of the asset = $12,800 / 32%
= $40,000
4th year Depreciation = $40,000 * 11.52%
= $4,608
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