[Anonymous]

I recently took the practice testlet for REG on the AICPA website and wanted to confirm an explanation to a question that I got wrong. The question basically ask you to compute the year 2 MACRS depreciation for a 5 year asset costing 20K. The MACRS table for a 5 year asset shows 20% for year 1 and 32% for year 2. I quickly applied the 32% towards the basis to get 6400 which showed up as wrong. Although no explanation is provided, I was able to back into the answer and see the solution used 12%. My initial logic was since they asked for year 2 only, you would use the difference of year 2 vs year 1 giving us the 12% applied toward the solution. By using that logic, that would mean the MACRS percentile would be cumulative but that doesn’t make sense with the percentile slowly decreasing. Can anyone explain why you would use 12% compared to the 32% as shown on the table.