Harris Corp. is a technology start-up and is in its second year of operations. The company didn't purchase any assets this year but purchased the following assets in the prior year:
| |
Placed in |
|
|
| Asset |
Service |
|
Basis |
| Office equipment |
August 14 |
$ |
10,000 |
| Manufacturing equipment |
April 15 |
|
68,000 |
| Computer system |
June 1 |
|
16,000 |
| Total |
|
$ |
94,000 |
|
|
Harris did not know depreciation was tax deductible until it hired an accountant this year and didn't claim any depreciation expense in its first year of operation.
a. What is the maximum amount of depreciation expense Harris Corp. can deduct in its second year of operation (ignore bonus and §179 expense)?
b. What is the basis of the office equipment at the end of the second year?