What is the amount of cost that can be deducted

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Problem 1: An asset (not an automobile) placed in service in June 2020 has a depreciable basis of $2,600,000, a recovery period of 5 years, and is the only asset placed in service during the year. Assuming bonus depreciation is not used, a half-year convention, and the expensing election is made for the maximum eligible amount, what is the amount of cost that can be deducted in 2020 assuming the business earned taxable income of $1,000,000 before deducting any cost recovery on the asset?

a. $407,000
b. $500,000
c. $1,000,000
d. $1,407,000
e. $2,000,000

Reference no: EM132856762

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