Record the truck on the books

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Question - Don and Warren formed an equal partnership to build drag-racing vehicles. Don contributed $5,000 in cash, and Warren contributed a truck with a fair market value of $5,000 and an adjusted tax basis of $4,500. They plan to use the truck for hauling parts and cars. When Warren purchased the truck 1 year earlier, he elected to use the straight line method to depreciate the truck using the mid-year convention over its 5-year recovery period. The partnership should

A. Record the truck on the books at $4,500 and depreciate it using the allowable method and convention over a 5-year recovery period.

B. Record the truck on the books at $4,500 and depreciate it over its remaining recovery period using the straight line method and mid-year convention.

C. Record the truck on the books at $5,000 and depreciate it over its remaining recovery period using the straight line method and mid-year convention.

D. Record the truck on the books at $5,000 and depreciate it using the allowable method and convention over a 5-year recovery period.

Reference no: EM133273977

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