Tonia acquires the following 5-year class property in 2018:AssetDate of AcquisitionCostXJanuary 15$70,000YMay 2845,000ZNovember 2390,000?Total$205,000Tonia does not elect §179 or bonus depreciation. Tonia has $300,000 of taxable income from her business. Determine her total cost recovery deduction for the year.
What will be an ideal response?
Since more than 40% ($90,000/$205,000 = 44%) of the assets were purchased in the 4th quarter, Tonia must use the mid-quarter convention.
Asset X:
| $70,000 × .35 | 24,500 |
| $45,000 × .25 | 11,250 |
| $90,000 × .05 | 4,500 |
| Total cost recovery deduction | $40,250 |
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