Tan Company acquires a new machine (ten-year property)on January 15,2016,at a cost of $200,000.Tan also acquires another new machine (seven-year property)on November 5,2016,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 2016.
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, since no election was made to use the straight-line method, the MACRS depreciation percentages for the first year are 20.00%, resulting in a deduction of $40,000 [(20.00% x $200,000) / 2]. 
For the seven-year property, since it was acquired in November and no election was made to use the mid-quarter convention, the MACRS depreciation percentages for the first year are 14.29%, resulting in a deduction of $2,857 [(14.29% x $40,000) / 2]. 
The total deduction for both machines is $42,857 ($40,000 + $2,857), which is option B.

Tan Company Acquires a New Machine (Ten-Year Property)on January 15,2016,at