Question

On February 2, 2019, Alexandra purchases a personal computer. The computer cost $1,800. Alexandra uses the computer 85 percent of the time in her accounting business, and the remaining 15 percent of the time for various personal uses. Calculate Alexandra's maximum depreciation deduction for 2019 for the computer, assuming half-year convention and she does not use bonus depreciation or make the election to expense.

Answer 1

$306

Step-by-step explanation:

In order to calculate Alexandra's maximum depreciation without any election to expense or any bonus depreciation, we must calculate the depreciation expense per year:

$1,800 x 20% (accelerated depreciation assuming half year convention for personal property) = $360

now we must multiply by 85% (time she uses the computer for her accounting practice) = $360 x 85% = $306

When we assume half year convention, we are only depreciating the asset by half year regardless of when the asset was purchased. In this case, the MACRS table gives us the following values:

5 years half year convention:

Year 1 = 20%

Year 2 = 32%

Year 3 = 19.20%

Year 4 = 11.52%

Year 5 = 11.52%

Year 6 = 5.76% the remaining half year