Question

Chad, a sole proprietor of a private boat charter business, purchased and placed into service ten boats for $260,000 each on May 1, Year 1. These were the only assets Chad placed into service in Year 1. Assume the boats have a 10 year MACRS recovery period. What is the maximum amount, if any, that Chad can deduct in Year 1 if he does not elect out of bonus depreciation

Answer 1

The maximum amount that Chad can depreciate in yer 1 if he decides not to elect bonus depreciation is $26,000

Step-by-step explanation:

MACRS 10 year depreciation rate of recovery half year convention:

Year Depreciation % Purchase cost Depreciation

1 10% $260,000 $26,000

2 18% $260,000 $46,800

3 14.40% $260,000 $37,440

4 11.52% $260,000 $29,952

5 9.22% $260,000 $23,972

6 7.37% $260,000 $19,162

7 6.55% $260,000 $17,030

8 6.55% $260,000 $17,030

9 6.56% $260,000 $17,056

10 6.55% $260,000 $17,030

11 3.28% $260,000 $8,528