Answer :
The maximum allowed cost recovery for 2022 for the communications equipment is $400,000.
To calculate the maximum allowed cost recovery for the communications equipment in 2022, we need to consider the depreciation method and recovery periods specified for the asset.
The communications equipment has a total installed price of $2,800,000 and is classified as a 7-year property. Assuming the Modified Accelerated Cost Recovery System (MACRS) depreciation method, we can use the MACRS depreciation tables provided by the IRS to determine the annual depreciation deductions.
From the MACRS depreciation tables, we find that the depreciation percentage for 7-year property in the second year (2022) is 14.29%.
Maximum Allowed Cost Recovery = Total Installed Price × Depreciation Percentage
= $2,800,000 × 14.29%
= $400,000
Therefore, the maximum allowed cost recovery for 2022 for the communications equipment is $400,000.
The maximum allowed cost recovery for 2022 for the communications equipment is $400,000.
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