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In 2020, Oscar Co. purchased a piece of business-use equipment for $1,000,000. The equipment has a...

In 2020, Oscar Co. purchased a piece of business-use equipment for $1,000,000. The equipment has a 7-year MACRS GDS recovery period and is depreciated under MACRSGDS (no SL election). The equipment was placed in service on September 10, 2020. This was the only asset that Oscar Co. placed in service in 2020. Oscar Co. did not electSection 179 deductions. Oscar Co. did not elect out of Section 168(k) bonus depreciation. What will Oscar’s depreciation deduction be for 2021?

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Answer #1

Basis: $1000000

Date of Placed in Service: September 10,2020

Recovery Period: 7 Years

IRS Convention: Mid month convention(As service is in middle of the month)

Depreciation Method: 125% Declining Balance Method(Assuming)

Year Adjusted Basis Rate% Depreciation Cumulative Book value

2020 1000000 3.72 37202 37202 962798

2021 962798 17.19 171928 209131 790869

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