Indigo Company acquires a new machine (5-year MACRS property) on February 2, 2019 at a cost of $100,000.On November 18, 2019, 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 2019?
A)$27,145.
B)$30,000.
C)$36,785.
D)$150,000.

Question

Quizplus · Accepted Answer

For the machine (5-year property), using the half-year convention and the MACRS table, the first-year deduction is 20% of $100,000, which equals $20,000. For the office equipment (7-year property), also using the half-year convention, the first-year deduction is 14.29% of $50,000, which equals $7,145. Adding these amounts gives a total MACRS deduction of $27,145 for 2019.

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