Question

Sairra, LLC purchased only one asset during the current year (a full 12-month tax year). Sairra placed in service furniture (7-year property) on April 16 with a basis of $25,000. Calculate the maximum depreciation expense for the current year? (ignoring §179 and bonus depreciation). (Use MACRS Table 1)

a. $3,573.
b. $1,786.
c. $4,463.
d. $5,000.

Answer 1

The maximum depreciation expense for the current year can be calculated using the Modified Accelerated Cost Recovery System (MACRS) Table 1. For furniture placed in service in the first year, the depreciation rate is 14.29%. The maximum depreciation expense for the current year is $3,573.

Step-by-step explanation:

The maximum depreciation expense for the current year can be calculated using the Modified Accelerated Cost Recovery System (MACRS) Table 1. For furniture placed in service in the first year, the depreciation rate is 14.29%.

The maximum depreciation expense can be calculated as follows:

1. Determine the depreciation rate: 14.29% of the basis = $3,573.50
2. Apply the depreciation rate for the full year: $3,573.50 * 12/12 = $3,573.50

Therefore, the maximum depreciation expense for the current year is $3,573.50. The correct answer is option a. $3,573.