Richards Corporation reports taxable income exceeding $1 million per year.In 2016 it acquired and placed in service $1,600,000 of new equipment.The equipment,its only property addition this year,is five-year property and was shipped directly from the factory.What is the maximum tax deduction it can take this year with respect to this new equipment?

Question

Quizplus · Accepted Answer

The maximum tax deduction includes the Section 179 deduction limit of $500,000, plus 50% bonus depreciation on the remaining $1,100,000 ($1,600,000 - $500,000), which is $550,000, and the MACRS depreciation on the remaining basis. The total is $1,160,000.

Richards Corporation Reports Taxable Income Exceeding $1 Million Per Year