Your company has purchased a large new trucktractor for over-the-road use (asset class 00.26). It has a cost basis of $186,000. With additional options costing $13,000, the cost basis for depreciation purposes is $199,000. Its MV at the end of seven years is estimated as $40,000. Assume it will be depreciated under the GDS: a. What is the cumulative depreciation through the end of year three? b. What is the MACRS depreciation in the fourth year? c. What is the BV at the end of year two? MACRS Class Lives and Recovery Periods Recovery Periods Asset Class Descriptions of Assets Class Life GDS ADS 00.11 Office furniture and equipment 10 7 10 00.12 Information systems, including computers 6 5 5 00.22 Automobiles, taxis 3 5 5 00.23 Buses 9 5 00.241 Light general purpose trucks 4 5 95 00.242 Heavy general purpose trucks 6 5 6 00.26 Tractor units for use over the road 4 3 4 01.1 Agriculture 10 7 10 10.0 Mining 10 7 10 13.2 Production of petroleum and natural gas 14 7 14 13.3 Petroleum refining 16 10 16 15.0 Construction 6 5 6 22.3 Manufacture of carpets 9 5 9 24.4 Manufacture of wood products and furniture 10 28.0 Manufacture of chemicals and allied products 9.5 30.1 Manufacture of rubber products 14 757 10 9.5 14 32.2 Manufacture of cement 20 15 20 34.0 Manufacture of fabricated metal products 12 7 12 36.0 Manufacture of electronic components, products, and systems 6 37.11 37.2 Manufacture of motor vehicles 12 Manufacture of aerospace products 10 48.12 Telephone central office equipment 18 10 5779 6 12 10 18 GDS Recovery Rates (r) for the Six Personal Property Classes Recovery Period (and Property Class) Year 3-year* 5-yeara 7-yeara 10-yeard 15-yearb 20-yearb 1 0.3333 0.2000 0.1429 0.1000 0.0500 0.0375 234 0.4445 0.3200 0.2449 0.1800 0.0950 0.0722 0.1481 0.1920 0.1749 0.1440 0.0855 0.0668 4 0.0741 0.1152 0.1249 0.1152 0.0770 0.0618 5 0.1152 0.0893 0.0922 0.0693 0.0571 6 0.0576 0.0892 0.0737 0.0623 0.0528 684 7 0.0893 0.0655 0.0590 0.0489 0.0446 0.0655 0.0590 0.0452 9 0.0656 0.0591 0.0447 10 11 12 13 14 15 16 17 0.0655 0.0590 0.0447 0.0328 0.0591 0.0446 0.0590 0.0446 0.0591 0.0446 0.0590 0.0446 0.0591 0.0446 0.0295 0.0446 0.0446 18 19 20 21 0.0446 0.0446 0.0446 0.0223