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8 October, 20:28

James purchased a new business asset (three-year personalty) on July 23, 2019, at a cost of $40,000. James takes additional first-year depreciation but does not elect Section 179 expense on the asset. Determine the cost recovery deduction for 2019.

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  1. 8 October, 23:53
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    The cost recovery deduction for 2019 is $26666

    Explanation:

    Additional first-year depreciation = 40000*0.5

    = $20000

    MACRS cost recovery = (40000 - 20000) * 0.3333

    = $6666

    Total cost recovery deduction for 2017 = Additional first-year depreciation + MACRS cost recovery

    = $20000 + $6666

    = $26666

    Therefore, The cost recovery deduction for 2019 is $26666
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