Question

Eduardo buys a delivery van (5-year MACRS property) to use in his flower store on June 18, 2019, at a cost of $18,000. On October 18, 2019, Eduardo takes advantage of a bankruptcy sale to purchase equipment for the flower store (7-year MACRS property) costing $34,000. Assuming that Eduardo does not wish to immediately expense any of the cost of the property purchased this year and elects not to claim bonus depreciation, what is his 2019 maximum allowable cost recovery deduction? Round your final answer to the nearest dollar amount.

Answer 1

$16,500

Step-by-step explanation:

When more than one asset is purchased for a lump sum, the basis of each is computed by apportioning the total cost based on the relative FMV of each asset. Lot #3 has a FMV that is 16.5% of the FMV of all of the lots purchased [$20,625 ÷ ($25,000 + $31,250 + $20,625 + $48,125)]. Thus, the basis of Lot #3 is $16,500 ($100,000 × 16.5%).