Chipper, a calendar-year corporation, purchased new machinery for $1,125,000 in February, 2011. In October, it purchased $1,075,000 of used machinery. What is Chipper's maximum cost recovery deduction for 2011?
A) $2,200,000
B) $1,578,603
C) $1,452,668
D) $1,321,473

Question

Quizplus · Accepted Answer

$1,125,000 bonus depreciation + [$500,000 - ($2,500,000 - $2,200,000) = $300,000 Sec. 179 expense allowed on the used machinery] + ($775,000 x .0357)= $1,452,667.50 The mid-quarter convention must be used because more than 40% is placed in service in the last quarter [($1,075,000 - $300,000) / ($1,125,000 + $1,075,000 - $300,000) = 40.79%]

Chipper, a Calendar-Year Corporation, Purchased New Machinery for $1,125,000 in February