Question

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.

Answer 1

The cost recovery deduction for 2019 is $26666

Step-by-step 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