Question

Calvin purchased a new office desk on July 23, 2018, at a cost of $2,373. He did not claim the bonus depreciation deduction. Using the half-year convention, Calvin may claim 2018 depreciation in the amount of __________.

Answer 1

Calvin may claim 2018 depreciation in the amount of $339.

Solution:

Given: Cost of the new desk = $2373

The recovery period of the new office desk is 7 years.

To find: Amount to be claimed on 2018 depreciation

We know, the rate of MACRS depreciation is 14.29% (Using the half-year convention)

$\Rightarrow \ 2373\times14.29\%=\ 2373\times\frac{14.29}{100}=\ 339$

MACRS is Modified Accelerated Cost Recovery System is the current tax depreciation system in the US.

Half-year convention is used to evaluate depreciation for tax purposes and denotes that the fixed assests will be considered to be in service for one-half of its first year, irrespective of actual purchase date.