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In 2016, Olga Co. purchased a piece of business-use equipment for $100,000. The equipment has a...

In 2016, Olga Co. purchased a piece of business-use equipment for $100,000. 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, 2016. This was the only asset that Olga Co. placed in service in 2016. Olga Co. did not elect Section179 deduction and elected out of Section 168(k) bonus depreciation. Olga Co. sold the equipment on February 1, 2019. What is Olga Co.'s depreciation deduction for 2019 (year 4)?

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Answer #1

The question is Olga Co.'s depreciation deduction for 2019 in 4th year ?

As per the Bonus Depreciation rule, entity claims 100% depreciation in the year when it use the acquired assets.

Hence, Equipment of $ 1,00,000 acquired and placed in service in 2016. So all the depreciation deduction upto 100% shall be claimed in this year 2016.

So, Olga Co.'s depreciation deduction for 2019 (year 4) shall be NIL.

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