Court Tax Case
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During the current year, Danny - a calendar-year taxpayer - acquired and placed in service the following business assets:
January: Delivery trucks $ 55,000
March: real estate building 150,000 used for warehouse.
June: Computer system 35,000
September: Automobile 25,000
November: Office equipment 95,000
Which convention(s) is(are) used to figure Danny's depreciation for the current year and why?
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Solution Summary
The court taxpayers calendars are examined.
Solution Preview
First, there are 3 conventions:
1. Half Year: assumes assets were purchased on average at the midpoint during the year no matter when they were actually purchased. This is the normal convention unless the mid-quarter or the mid-month convention is required.
2. Mid Quarter: only applies when more than 40% of the total costs of assets were placed in service in the last three months of the year. This convention applies to personal property only because real estate is already ...
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