Chipper, a calendar-year corporation, purchased new machinery for $1,135,000 in February, 2017. In October, it purchased $1,105,000 of used machinery. What was Chipper's maximum cost recovery deduction for 2017?

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Sec. 179 expensing was limited to $300,000 [$510,000 - ($1,135,000 + $1,105,000 - $2,030,000)] 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 [$1,105,000 - $300,000)/($1,135,000 + $1,105,000 - $300,000) = 41.5%]; MACRS: ($1,105,000 - $300,000) x .0357 = $28,739. Bonus depreciation: $1,135,000 x .5 = $567,500; MACRS: [($1,135,000 - $567,500 bonus) x .25 = $141,875). Total cost recovery = $1,038,114 (300,000 + $28,739 + $567,500 + $141,875).

Chipper, a Calendar-Year Corporation, Purchased New Machinery for $1,135,000 in February