MACRS 40% Test and Bonus Depreciation. Small Corporation purchased and placed in

Question

MACRS 40% Test and Bonus Depreciation. Small Corporation purchased and placed in service the following 100% business-use assets (all of the assets were purchased new). Assume that Small purchased these assets in Year 1 , when 50% bonus depreciation was available on eligible property (as "eligible property" has been typically defined for years when bonus depreciation was available). Small claimed bonus depreciation but no Sec. 179 election on all eligible property in Year Truck (light-duty, modified non-personal use) costing $20,000: Placed in service on February 15, Year 1 with a 5-year MACRS recovery period. Machinery costing $50,000: Placed in service on May 1, Year 1 with a 7-year MACRS recovery period. Land costing $60,000: Placed in service on July 1, Year 1 Building costing $100,000: Placed in service on December 1, Year 1 with a 39-year MACRS recovery period. Equipment costing $40,000: Acquired on Dcbr 24, Year 1 and placed in service on January 5, Year 2 with a 5-year MACRS recovery period What are Small's total depreciation deductions in Year 1 and Year 2?

Explanation / Answer

To be noted, that land is not depreciated, hence not included in the calculation

Fixed Assets Cost No. of years MACR Rates Year 1 MACR Rates Year 2 Truck 20000 5 35% 7000 26% 3380 Machinery 50000 7 17.85% 8925 23.47% 9640.30 Building 100000 39 2.56% 2564 2.56% 2498.26 Equipment 40000 5 35% 14000 26% 6760.00 Total Depreciation = 32489 22278.56

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