Indigo Company acquires a new machine (5-year MACRS property) on February 2, 2018 at a cost of $100,000. On November 18, 2018, Indigo also acquires office equipment (7-year MACRS property) at a cost of $50,000. Indigo does not make a § 179 expense election and chooses not to take additional first-year depreciation. What is Indigo's total MACRS deduction for 2018?
A) $27,145.
B) $30,000.
C) $36,785.
D) $150,000.
E) None of the above.

Question

Quizplus · Accepted Answer

The MACRS deduction for the 5-year property (machine) is 20% of $100,000, which is $20,000. The deduction for the 7-year property (office equipment) is 14.29% of $50,000, which is $7,145. The total MACRS deduction for 2018 is $20,000 + $7,145 = $27,145.

Indigo Company Acquires a New Machine (5-Year MACRS Property) on February