Chipper,a calendar-year corporation,purchased new machinery for $1,125,000 in February,2014.In October,it purchased $1,075,000 of used machinery.What was Chipper's maximum cost recovery deduction for 2014?

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Sec.179 expensing was limited to $300,000 ($2,500,000 - $1,125,000 - $1,075,000 = $300,000.)applied to the used machinery as it was not eligible for bonus depreciation.The mid-quarter MACRS convention was required as more than 40% was invested in the last quarter [$775,000)/($1,125,000 + $775,000)= 40.79]; MACRS: $775,000 x .0357 = $27,668.Bonus depreciation: $1,125,000 x .5 = $562,500; MACRS: [($1,125,000 - $562,500 bonus)x .25 = $140,625).Total cost recovery = $1,030,793 (300,000 + $27,668 + $562,500 + $140,625).

Chipper,a Calendar-Year Corporation,purchased New Machinery for $1,125,000 in February,2014