Davis, Inc., a motorcycle wheel manufacturer, purchased a new spoke machine in 2014 for $200,000. What are the tax effects of this purchase? I. If taxable income is $100,000, then $25,000 can be expensed in 2014. II. No Section 179 election is allowed if Davis decides to use a $200,000 depreciable basis. III. If Davis had purchased a total of $400,000 of equipment in 2014, the corporation can deduct none of the purchases in 2014 through use of the Section 179 election.

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The Answer of Davis, Inc., a motorcycle wheel manufacturer, purchased a new spoke machine in 2014 for $200,000. What are the tax effects of this purchase? I. If taxable income is $100,000, then $25,000 can be expensed in 2014. II. No Section 179 election is allowed if Davis decides to use a $200,000 depreciable basis. III. If Davis had purchased a total of $400,000 of equipment in 2014, the corporation can deduct none of the purchases in 2014 through use of the Section 179 election.