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:

Yield Compounded

The process where investment gains earn additional earnings over time.

Holding-Period Return

The total return received from holding an asset or portfolio of assets over a period, typically expressed as a percentage.

Effective (Annualized) Yield

A calculation of the annual return on an investment, taking into account the effect of compounding interest.

Consumer Price Index

An index that measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.