Tan Company acquires a new machine (ten-year property)on January 15,2014,at a cost of $200,000.Tan also acquires another new machine (seven-year property)on November 5,2014,at a cost of $40,000.No election is made to use the straightline 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 2014.
A)$24,000
B)$25,716
C)$102,000
D)$132,858
E)None of these

Question

Tan Company acquires a new machine (ten-year property)on January 15,2014,at a cost of $200,000.Tan also acquires another new machine (seven-year property)on November 5,2014,at a cost of $40,000.No election is made to use the straight­line 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 2014.
A)$24,000
B)$25,716
C)$102,000
D)$132,858
E)None of these

Quizplus · Accepted Answer

The total cost recovery is computed as follows: 10-year property
MACRS cost recovery ($200,000 × .10)$20,000
7-year property
MACRS cost recovery ($40,000 × .1429)5,716
Total cost recovery $25,716

Tan Company Acquires a New Machine (Ten-Year Property)on January 15,2014,at