[Anonymous]

Krol Corp., a calendar-year taxpayer, purchased used furniture and.fixtures for use in its business and placed the

property in service on November 1,2010. The furniture and fixtures $56,000 and represented Krol’s only acquisition

of depreciable property during the year. Krol did not elect to expense any part of the cost of the property under Sec.

179. What is the amount of Krol Corp.’s depreciation deduction for the furniture and fixtures under the Modified

Accelerated Cost Recovery System (MACRS) for 2010?

a. $ 2,000

b. s 2,667

c. $8,000

d. $16,000

Ans is A. (56000/8)*(2/7)

My question if we are using mid month convention, why not *(2/6)??? why (2/7), if we use 2/6 the answer is B which is wrong.

[Whopper Warrior]

The way I understand it which is by fractions.

MACRS is double decling balance so we use

(2/7) (furniture has a 7 year life)

multiplied by either half year (1/2) or midquater (x.5/12) convention

(1.5/12) (in this example we use 1.5 because of the last quarter, alternatively we could use .5/4 or it was outstanding for 1/2 of 1 quarter out of 4 quarters)

so we get:

(2/7) * (1.5 / 12)

your example uses (2/7) * (1/8)

1/8 * 1.5/1.5 equals 1.5/12

we pull the 1/8 from the (56000/8)

Longstory short: we use 2/7 because furniture is 7 year property and macrs uses a double decling balance so instead of 1/7 we use 2/7.

ALL 4 parts passed summer 13
Ethics October 13
Experience (waiting)

Becker Only

[Whopper Warrior]

The way I understand it which is by fractions.

MACRS is double decling balance so we use

(2/7) (furniture has a 7 year life)

multiplied by either half year (1/2) or midquater (x.5/12) convention

(1.5/12) (in this example we use 1.5 because of the last quarter, alternatively we could use .5/4 or it was outstanding for 1/2 of 1 quarter out of 4 quarters)

so we get:

(2/7) * (1.5 / 12)

your example uses (2/7) * (1/8)

1/8 * 1.5/1.5 equals 1.5/12

we pull the 1/8 from the (56000/8)

Longstory short: we use 2/7 because furniture is 7 year property and macrs uses a double decling balance so instead of 1/7 we use 2/7.

ALL 4 parts passed summer 13
Ethics October 13
Experience (waiting)

Becker Only

[10keyLeah]

My understanding is this is not mid-month, but mid-quarter because over 40% of the property was purchased in the last quarter so you use mid-quarter. As Whopper said, you would use 2/7.

Ninja Combo, Yaeger, Wiley -- Licensed CPA, May 2015

[10keyLeah]

My understanding is this is not mid-month, but mid-quarter because over 40% of the property was purchased in the last quarter so you use mid-quarter. As Whopper said, you would use 2/7.

Ninja Combo, Yaeger, Wiley -- Licensed CPA, May 2015

[UCMCPA]

You can't use MM on personal property, only real…

FAR - 84
AUD - 94
REG - 86
BEC - 86

[UCMCPA]

You can't use MM on personal property, only real…

FAR - 84
AUD - 94
REG - 86
BEC - 86

[Author]

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