Section 7-DEPRECIATION UNDER FEDERAL INCOME TAX DEPRECIATION RULES

Table 1: Half-Year Convention

200% Declining Balance

Year	3 Year	5 Year	7 Year
1	33.33%	20.00%	14.29%
2	44.45%	32.00%	24.49%
3	14.81%	19.20%	17.49%
4	7.41%	11.52%	12.49%
5		11.52%	8.93%
6		5.76%	8.92%
7			8.93%
8			4.46%
9
10
11
12
13
14
15

1. Below are four asset purchases made in 2012:

AssetCostDate

Office Table$1,000January 1, 2012

Office Desk1,500September 29, 2012

File Cabinet2,000October 15, 2012

Computer6,000December 31, 2012

What is the maximum 2012 Section 179 deduction for these purchases?

a.$10,500

b.$2,500

c.$8,000

d.$0

2.On May 11, 2012, your calendar year firm pays$6,000 for a used computer server, its only asset purchase for the year, and estimates that the server will have a salvage value of $500. If no Section 179 deduction is taken, what is your firms maximum 2012 deduction for depreciation?

a. $2,000

b. $1,200

c. $1,100

d. $869