Jim acquires and placed in service a new five-year class asset on October 1, 2020, for $120,000. This is the only asset he acquires in 2020. He does not elect to expense any of the asset under 179.

Scenario One:

(a) Show the calculation of depreciation Jim could take in 2020 on this asset to get the maximum write-off without using Section 179. Label your work completely as to nature of depreciation/cost recovery you are taking.

(b) Show Jims depreciation calculation for year 2.

(c) Show Jims adjusted basis at the end of year 2.

Scenario Two:

(d) If instead Jim takes only MACRS depreciation on this asset in year one, show the calculation of 2020 MACRS depreciation.

(e) Jim sells the asset on August 1, 2021. Determine Jims cost recovery in 2021.