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Iris placed in service a new business asset (five-year property) on November 30, 2017, at a...

  1. Iris placed in service a new business asset (five-year property) on November 30, 2017, at a cost of $100,000. This was the only asset acquired by Iris during 2017. She did NOT elect to expense any of the asset cost under § 179. Iris elected OUT of bonus depreciation (therefore no additional first year depreciation). Can you check if these are correct and help with 2c show work please.

  1. Determine her cost recovery for 2017.

                              100,000*.20= $20,000 is her cost recovery for 2017

  1. Determine cost recovery in 2018 (year 2)

100,000*.32= $32,000 is her cost recovery for 2018

  1. Determine cost recovery in 2017 if bonus depreciation had been used.

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Answer #1

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Let me know in case any issue and query:

As per IRS, if more than 40% of asset value is put to use in last quarter of finanial year. Then Mid-Quarter con ent on w be applied. Since, Asset was purchased and put in use on November. Therefore, Mid month convention will be used for MACRS depreciation: Solution: Explanation ( 100000*5%) Answer: a) 5,000 b S 38,000 (100000 3896) c) 52,500 Bonus as per 2017 rules-50% of asset value. Therefore, Bonus (100000*50% MACRS Dep Total Cost recover 2017 $ 50,000 $2,500 52,500 50000*5%)

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