Question

An asset (not an automobile) placed in service in June 2018 has a depreciable basis of $35,000 and a recovery period of 5 years. Assuming bonus depreciation is used, a half-year convention, and no expensing election, what is the maximum amount of cost that can be deducted in 2018?

Answer 1

$35,000

Step-by-step explanation:

The Tax Cuts and Jobs Act increased the percentage of bonus depreciation for qualifying assets from 50% to 100% for those assets acquired and put into service between September 27, 2017 and January 1, 2023. If this asset qualifies for a bonus depreciation, then you can depreciate 100% during the first year. You can also use the bonus depreciation with a section 179 expensing in order to depreciate expensive assets, but the section 179 expensing comes first and then the bonus depreciation.

Answer 2

The Cost that can be deducted will be $3,500

Step-by-step explanation:

Bonus Depreciation=$35,000*50%=$17,500

Now cost deductible in 2018 will be=$17,500/5=$3,500

Currently 50% bonus depreciation being deducted on assets as per new rulings.