During the year 2018, a calendar-year taxpayer, Marvelous Munchies, a chain of specialty food shops, purchased equipment as follows:Date Asset CostMarch 3Refrigerators 600,000October 9Equipment 2,200,000Assume the property is all 5-year property. What is the maximum depreciation that may be deducted for the assets this year, 2018, assuming Sec. 179 expensing and bonus depreciation are not claimed?
What will be an ideal response?
The mid-quarter convention must be used because $2,200,000/$2,800,000 or 66 2/3% of the assets were purchased in the last quarter of the year.
| $600,000 × .35 | = | $210,000 |
| $2,200,000 × .05 | = | 110,000 |
| Total | $320,000 |
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