On July 15, 2009, Travis purchased some office furniture for $20,000 to be used in his business. He did not elect to expense the equipment under §179 or bonus. On December 15, 2011, he sells the equipment. What is his cost recovery deduction for 2011?
A. $0
B. $1,749
c. $3,498
is it C
No, it's not C...remember, this is a Half-Year Convention and for the YEAR OF DISPOSAL you need to divide the percentage by 2. Hope that helps.
To calculate Travis's cost recovery deduction for 2011, we need to determine the depreciation amount for the office furniture.
First, we need to determine the property's recovery period. According to the IRS, office furniture falls under the category of 7-year property.
Next, we need to calculate the depreciation allowance for 2011. For 7-year property, the depreciation method is the Modified Accelerated Cost Recovery System (MACRS). To calculate the depreciation, we use the MACRS depreciation table.
According to the MACRS table, for 7-year property placed in service in 2009, the depreciation percentage for the third year (2011) is 14.29%.
Using this depreciation percentage, we can calculate the cost recovery deduction for 2011:
Cost Recovery Deduction = Initial Cost * Depreciation Percentage
= $20,000 * 0.1429
= $2,858
Therefore, the cost recovery deduction for 2011 is $2,858.
Since none of the provided options match the calculated amount, it seems there might be an error in the answer choices or the data given.