Tan Company acquires a new machine (ten-year property) on January 15,2015,at a cost of $200,000.Tan also acquires another new machine (seven-year property) on November 5,2015,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 if available.Determine the total deductions in calculating taxable income related to the machines for 2015.
A)$24,000
B)$25,716
C)$102,000
D)$132,858
E)None of the above

Question

Quizplus · Accepted Answer

For the ten-year property:
- MACRS depreciation rate is 10% for Year 1
- Depreciation expense for Year 1 is $20,000 (=$200,000 x 10%)
For the seven-year property:
- MACRS depreciation rate is 14.29% for Year 1
- Depreciation expense for Year 1 is $5,716 (=$40,000 x 14.29%)
Total depreciation expense for both properties in Year 1 is $25,716.

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