Watson Company purchases used equipment (5-year MACRS property)for $570,000 on July 8,2017.What is Watson' maximum allowable cost recovery deduction for 2017 on the equipment if this is the only purchase of equipment for 2017?

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Watson can take a Section 179 deduction of $510,000 (the limit for 2017) and then apply 50% bonus depreciation on the remaining $60,000, which is $30,000. The total deduction is $510,000 + $30,000 = $540,000. However, the maximum allowable deduction is limited to the cost of the equipment, which is $570,000. Therefore, the maximum allowable deduction is $530,000.

Watson Company Purchases Used Equipment (5-Year MACRS Property)for $570,000 on July