Tan Company acquires a new machine (ten-year property)on January 15,2011,at a cost of $200,000.Tan also acquires another new machine (seven-year property)on November 5,2011,at a cost of $40,000.No election is made to use the straight-line method.The company does not make the § 179 election.Tan elects not to take additional first-year depreciation.Determine the total deductions in calculating taxable income related to the machines for 2011.

Question

Quizplus · Accepted Answer

For the ten-year property machine:
- MACRS depreciation for year 1 (using the 200% DB method) = (1/10) x 2 x $200,000 = $40,000
- No other deductions are taken for this machine

For the seven-year property machine:
- MACRS depreciation for year 1 (using the 200% DB method) = (1/7) x 2 x $40,000 = $11,429
- No other deductions are taken for this machine

Total deductions for the year:
$40,000 + $11,429 = $51,429

Therefore, the correct answer is B, $25,716 (assuming a tax rate of 50%).

Tan Company Acquires a New Machine (Ten-Year Property)on January 15,2011,at