Jim Acquires a New Seven-Year Class Asset on September 20

question 21

Essay

Jim acquires a new seven-year class asset on September 20, 2017, for $80,000. He placed the asset in service on October 5, 2017. He does not elect to expense any of the asset under § 179 or elect straight-line, cost recovery. He takes additional first-year depreciation. He sells the asset on August 25, 2018. This is the only asset he acquires in 2017. Determine Jim's cost recovery in 2017 and 2018.

---

Definitions:

Net Capital Outflow

The difference between the domestic country's purchase of foreign assets and the foreign purchases of the domestic country's assets over a specified period, reflecting the flow of capital across borders.

Capital Asset

A long-term asset such as equipment, real estate, or machinery that a company uses in its operations to generate wealth.

Loanable Funds

The market where savers provide funds to borrowers, usually influencing interest rates.

Foreign-Currency Exchange

The conversion of one currency into another currency, a critical process for international trade, travel, and investment.