Terra Corporation,a calendar-year taxpayer,purchases and places into service machinery with a 7-year life that cost $125,000.The mid-quarter convention does not apply.Terra elects to depreciate the maximum under Sec.179.Terra's taxable income for the year before the Sec.179 deduction is $700,000.What is Terra's total depreciation deduction related to this property?

Question

Quizplus · Accepted Answer

Since Terra elects to depreciate the maximum under Sec.179, the first-year depreciation is $125,000. The remaining basis for regular depreciation is $0.

Thus, the total depreciation deduction related to this property is:
$125,000 (Sec.179 deduction) + $39,290 (Regular depreciation) = $164,290

Therefore, the best choice is D.

Terra Corporation,a Calendar-Year Taxpayer,purchases and Places into Service Machinery with a 7-Year