Pat Purchased a Used Five-Year Class Asset on March 15

question 85

Multiple Choice

Pat purchased a used five-year class asset on March 15, 2017, for $60,000. He did not elect § 179 expensing. Determine the cost recovery deduction for 2017 for earnings and profits purposes.

• A)$2,000
• B)$3,000
• C)$6,000
• D)$12,000
• E)None of the above

---

Definitions:

Discount Rate

The interest rate used to determine the present value of future cash flows.

Promissory Notes

Written promises to pay a specified sum of money to a specified person at a specified time.

Compounded Monthly

Interest calculation method where interest is added to the principal balance monthly, affecting future interest computations.

25 Years

A term often referring to the duration of a loan or mortgage, indicating the time over which repayments are to be made.