Taxes: Barge at Sale

Suppose you purchase a $10,000 barge — a 10-year asset. Under the MACRS what is depreciation on the barge in year 5 if you sell it on January 15th of that year?

Look at MACRS table on this page of the wiki.

Since it is a 10-year asset and we are asked to find the depreciation on the barge in year 5, the depreciation is 9.22% of the cost basis in that year.

Now, ($10,000)*(9.22/100) = $ 922

However, the question states that the barge is sold in that year. We only get half a year's worth of depreciation in the year we sell it. The answer is then ( $922/ 2) = ($ 461)

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