White Company acquires a new machine (seven-year property) on July 10, 2017, at
ID: 2596176 • Letter: W
Question
White Company acquires a new machine (seven-year property) on July 10, 2017, at a cost of $700,000. White makes the election to expense the maximum amount under S 179. Determine the total deductions (Section 179, bonus and regular depreciation) in calculating taxable income related to the machine for 2017 assuming White has taxable income of $900,000 (round to nearest dollar). (I BELIEVE THE ANSWER IS A, But PLEASE EXPLAIN IN WORDS!!!!)
A. $614,290
B. $500,000
C. $339,579
D. $490,000
E. None of the above
Explanation / Answer
The Answer is "A"
Calculation for Depreciation :-
Maximum Depreciation under sec. 179 = $500000
Bouns Depreciation = 50% of Balance
= ($700000 - $500000) * 50%
= $200000 * 50%
= $100000
Regular Depreciation = Balance * MARCS Table 7 year rate
= ($700000 - $500000 - $100000) * 14.29%
= $100000 * 14.29%
= $14290
Total Depreciation = $500000 + $100000 * $14290 = $614290
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