White Company acquires a new machine (seven-year property)on January 10,2010,at a cost of $900,000.White makes the election to expense the maximum amount under § 179.No election is made to use the straight-line method.If Congress reenacts additional first-year depreciation for 2010,White does elect not to take additional first-year depreciation.Determine the total deductions in calculating taxable income related to the machine for 2010 assuming White has taxable income of $500,000.
A)$64,000.
B)$128,610.
C)$257,175.
D)$500,000.
E)None of the above.

Question

Quizplus · Accepted Answer

The maximum § 179 expense deduction for 2010 is $500,000. White can deduct the full $500,000 under § 179, and then calculate the MACRS depreciation on the remaining $400,000 ($900,000 - $500,000) using the 200% declining balance method over 7 years. The MACRS deduction for the first year is $57,143 (14.29% of $400,000). Total deduction = $500,000 + $57,143 = $557,143, but limited to taxable income of $500,000.

White Company Acquires a New Machine (Seven-Year Property)on January 10,2010,at