Tan Company acquires a new machine (10-year property) on January 15, 2019, at a cost of $200,000.Tan also acquires another new machine (7-year property) on November 5, 2019, at a cost of $40,000.No election is made to use the straight-line method.The company does not make the § 179 election and elects to not take additional first- year depreciation.Determine the total deductions in calculating taxable income related to the machines for 2019.
A)$24,000
B)$25,716
C)$102,000
D)$132,858
E)None of these.

Question

Quizplus · Accepted Answer

For the 10-year property, using the MACRS depreciation table, the deduction for 2019 is calculated as follows:
$200,000 x 14.29% = $28,580

For the 7-year property, using the MACRS depreciation table, the deduction for 2019 is calculated as follows:
($40,000 × 20.00%) × 2/12 = $1,333

The total deductions for the year related to the machines is:
$28,580 + $1,333 = $29,913

Therefore, the correct answer is B) $25,716 (subtracting the 80% limitation as per the MACRS table: $29,913 x 0.86 = $25,716).

Tan Company Acquires a New Machine (10-Year Property) on January