Equipment is purchased for $55,000 in January and used 100% in the business. The salvage value is $5,000. The company estimates 7 year life. The MACRS life is 5 years and the 1st year percent is 20%. The company elects not to take any accelerated depreciation. For tax purposes, the deprecation for year 1 will be based on:

a $50,000/7 years

b. $55,000 x 20%

c. $50,000 x 20%

d. its up to the company