Harris Corp. is a technology start-up in its second year of operations. The company didnt purchase any assets this year but purchased the following assets in the prior year:

	Placed in
Asset	Service		Basis
Office equipment	August 14	$	12,000
Manufacturing equipment	April 15		88,000
Computer system	June 1		36,000
Total		$	136,000

Harris did not know depreciation was tax deductible until it hired an accountant this year and didnt claim any depreciation deduction in its first year of operation. (Use MACRS Table 1 and Table 2.)

a. What is the maximum amount of depreciation deduction Harris Corp. can deduct in its second year of operation? (Leave no answer blank. Enter zero if applicable.)

Depreciation Deduction =

b. What is the basis of the office equipment at the end of the second year? (Leave no answer blank. Enter zero if applicable.)

Basis of Office Equipment =

TABLE 1 MACRS Half-Yoar Convention Year 3-Year 33.33% 44.45 14.51 7.41 Depreciation Rate for Recovery Period 5-Year 7-Year 10-Year 15-Year | 20-Year 20.00% 14.29% 10.00% 5.00% 3.750% 32.00 24.49 15.00 9.50 7.219 19.20 14.40 S.55 6.677 11.52 12.49 11.52 6.177 11.52 8.93 5.713 5.255 17.49 7.70 8.93 4.888 4.46 4.522 501 4.462 5.90 4.461 5.91 4.462 4.461 4.462 4.461 4.462 2.95 4.461 4.462 4.461 4.462 4.461 2.231 TABLE 2 MACRS Mid-Quarter Convention: For property placed in service during the first quarter Year Depreciation Rate for Recovery Period 5-Year 35.00% 26.00 15.60 11.01 11.01 1.38 7-Year 25.00% 21.43 15.31 10.93 8.75 8.74 8.75 1.09 TABLE 26 MACRS Mid-Quarter Convention: For property placed in service during the second quarter Depreciation Rate for Recovery Period Year 5-Year 7-Year 25.00% 17.85% 30.00 23.47 18.00 16.76 11.37 11.97 11.37 8.57 4.26 8.57 8.87 3.34 TABLE 26 MACRS Mid-Quarter Convention: For property placed in service during the third quarter Year Depreciation Rate for Recovery Period 5-Year 15.00% 34.00 20.40 12.24 11.30 7-Year 10.71% 25.51 18.22 13.02 9.30 8.55 3.56 5.53 7.06 TABLE 2d MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Year 7-Year 3.57% 27.55 Depreciation Rate for Recovery Period 5-Year 5.00% 38.00 22.50 13.68 10.94 9.58 19.68 14.06 10.04 8.73 8.73 7.64