Phyllis Purchased $8,000 of Specialized Audio Equipment That She Uses

question 26

Essay

Phyllis purchased $8,000 of specialized audio equipment that she uses in her business regularly. Occasionally, she uses the equipment for personal use. During the first year, Phyllis used the equipment for business use 70 percent of the time; however, during the current (second)year, the business use fell to 40 percent. Assume that the equipment is seven-year MACRS property and is under the half-year convention. Assume the ADS recovery period is 10 years. What is the depreciation allowance for the current year? (Use MACRS Table 1.)(Round final answer to the nearest whole number.)

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Definitions:

Partnership Agreement

A contract between business partners outlining the terms of their partnership, responsibilities, profit distribution, and rules for leaving the partnership.

Winding-Up Phase

The process of settling accounts and liquidating assets in the final stage of a company's existence.

Limited Liability

is a legal structure that limits the financial responsibility of an entity's owners or shareholders to the amount they have invested, protecting personal assets from business debts and obligations.

LLC Member

An individual or entity that owns a portion of a Limited Liability Company and enjoys protection from personal liability for the company's debts and obligations.