Richards Tree farm, Inc has just purchased a new aerial tree trimmer for $90,000. Calculate the depreciation schedule using a seven-year life (for the property class category of a single-purpose agricultural and horticultural structure from table 10.3) for both straight-line depreciation and MACRS,
| Year |
3-Year |
5-Year |
7-Year |
10-Year |
| 1 |
33.33% |
20.00% |
14.29% |
10.00% |
| 2 |
44.45% |
32.00% |
24.49% |
18.00% |
| 3 |
14.81% |
19.20% |
17.49% |
14.40% |
| 4 |
7.41% |
11.52% |
12.49% |
11.52% |
| 5 |
|
11.52% |
8.93% |
9.22% |
| 6 |
|
5.76% |
8.93% |
7.37% |
| 7 |
|
|
8.93% |
6.55% |
| 8 |
|
|
4.45% |
6.55% |
| 9 |
|
|
|
6.55% |
| 10 |
|
|
|
6.55% |
| 11 |
|
|
|
3.28% |
Use the half-year convention for both methods. Compare the depreciation schedules before and after taxes using a 40% tax rate. What do you notice about the difference between these two methods?