Lenter LLC placed in service on April 29, 2019, machinery and equipment (seven-year property)with a basis of $1,600,000.Assume that Lenter has sufficient income to avoid any limitations.Calculate the maximum depreciation deduction including §179 expensing (but ignoring bonus expensing).(Use MACRS Table 1.)
A)$228,640.
B)$1,020,000.
C)$1,102,882.
D)$1,228,640.
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

First, we need to determine the basis for depreciation. Since the property is seven-year property, it falls under the MACRS property classes of 5-year and 7-year property. We will use the half-year convention since the property was placed in service after the end of the first quarter.

Therefore, the basis for depreciation is:

$1,600,000 x 0.5 = $800,000

Next, we can calculate the maximum depreciation deduction including §179 expensing as follows:

$1,600,000 x 0.50 x 14.29% = $114,880 (Year 1)

$685,120 x 24.49% = $167,502 (Year 2)

$685,118 x 17.49% = $119,972 (Year 3)

$685,116 x 12.49% = $85,633 (Year 4)

$685,115 x 8.93% = $61,277 (Year 5)

$685,115 x 8.92% = $61,273 (Year 6)

$685,115 x 4.46% = $30,567 (Year 7)

Total Depreciation Deduction = $650,104 + $114,880 (§179 expensing) = $765,984

Therefore, the maximum depreciation deduction including §179 expensing is $1,102,882. The correct answer is C.

Lenter LLC Placed in Service on April 29, 2019, Machinery