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10-50 (LO 10-2) (Algo) Way Corporation disposed of the following tangible personal property assets in the current year. Original Basis Asset Furniture (7-year) Date Acquired
10-50 (LO 10-2) (Algo) Way Corporation disposed of the following tangible personal property assets in the current year. Original Basis Asset Furniture (7-year) Date Acquired 5/12/2018 Date Sold Convention 7/15/2022 HY $ 65,000 Machinery (7-year) 3/23/2019 3/15/2022 Delivery truck* (5-year) 9/17/2020 3/13/2022 Machinery (7-year) 10/11/2021 8/11/2022 Computer (5-year) 10/11/2022 12/15/2022 MQ 82,000 HY 28,000 MQ 280,400 HY 88,000 *Used 100 percent for business. Assume that the delivery truck is not a luxury auto. Calculate Way Corporation's 2022 depreciation deduction (ignore 179 expense and bonus depreciation for this problem). (Use MACRS Table 1, Table 2, and Exhibit 10-6.) Note: Round your intermediate dollar calculations and final answer to the nearest whole dollar amount. Table 1 MACRS Half-Year Convention Depreciation Rate for Recovery Period 7-Year 10-Year 3-Year 5-Year 15-Year 20-Year Year 1 33.33% 20.00% 14.29% 10.00% 5.00% 3.750% Year 2 44.45 32.00 24.49 18.00 9.50 7.219 Year 3 14.81 19.20 17.49 14.40 8.55 6.677 Year 4 7.41 11.52 12.49 11.52 7.70 6.177 Year 5 11.52 8.93 9.22 6.93 5.713 Year 6 5.76 8.92 7.37 6.23 5.285 Year 7 8.93 6.55 5.90 4.888 Year 8 4.46 6.55 5.90 4.522 Year 9 6.56 5.91 4.462 Year 10 6.55 5.90 4.461 Year 11 3.28 5.91 4.462 Year 12 5.90 4.461 Year 13 5.91 4.462 Year 14 5.90 4.461 Year 15 5.91 4.462 Year 16 2.95 4.461 Year 17 4.462 Year 18 4.461 Year 19 4.462 Year 20 4.461 Year 21 2.231 TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 35.00% 25.00% Year 2 26.00 21.43 Year 3 15.60 15.31 Year 4 11.01 10.93 Year 5 11.01 8.75 Year 6 1.38 8.74 Year 7 8.75 Year 8 1.09 TABLE 2b MACRS Mid-Quarter Convention: For property placed in service during the second quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 25.00% 17.85% Year 2 30.00 23.47 Year 3 18.00 16.76 Year 4 11.37 11.97 Year 5 11.37 8.87 Year 6 4.26 8.87 Year 7 8.87 3.34 Year 8 TABLE 2c MACRS Mid-Quarter Convention: For property placed in service during the third quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 15.00% 10.71% Year 2 34.00 25.51 Year 3 20.40 18.22 Year 4 12.24 13.02 Year 5 11.30 9.30 Year 6 7.06 8.85 Year 7 8.86 Year 8 5.53 TABLE 2d MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 5.00% 3.57% Year 2 38.00 27.55 Year 3 22.80 19.68 Year 4 13.68 14.06 Year 5 10.94 10.04 EXHIBIT 10-6 Mid-Quarter Convention Percentage of Full-Year's Depreciation in Year of Disposition Quarter of Disposition Percentage Calculation* 1st 12.5% 1.5/12 2nd 37.5 4.5/12 3rd 62.5 4th 87.5 7.5/12 10.5/12 *The calculation is the number of months the taxpayer held or is deemed to have held the asset in the year of disposition divided by 12 months in the year
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