White Company acquires a new machine (seven-year property)on January 10,2013,at a cost of $600,000.White makes the election to expense the maximum amount under § 179.No election is made to use the straightline method.White does take additional first-year depreciation.Determine the total deductions in calculating taxable income related to the machine for 2013 assuming White has taxable income of $800,000.

Question

White Company acquires a new machine (seven-year property)on January 10,2013,at a cost of $600,000.White makes the election to expense the maximum amount under § 179.No election is made to use the straight­line method.White does take additional first-year depreciation.Determine the total deductions in calculating taxable income related to the machine for 2013 assuming White has taxable income of $800,000.

Quizplus · Accepted Answer

S1U1B0§ 179 expense $500,000
Additional first­year depreciation [($600,000 - $500,000)× .50] 50,000
MACRS cost recovery ($50,000 × .1429)7,145
Total $557,145

White Company Acquires a New Machine (Seven-Year Property)on January 10,2013,at