Question

During 2022, William purchases the following capital assets for use in his catering business. He decides to use the election to expense on baking equipment and uses the MACRS accelerated method for depreciation. Which assets did he elect to expense on?

a. New passenger automobile
b. Baking equipment
c. Both the automobile and baking equipment
d. Neither the automobile nor baking equipment

Answer 1

William elected to expense on baking equipment and not on the new passenger automobile for his catering business.

Step-by-step explanation:

William elected to expense on baking equipment and not on the new passenger automobile for his catering business.

The MACRS accelerated method for depreciation allows for expensing on certain assets that have a short useful life, such as baking equipment, rather than depreciating them over time. By electing to expense on baking equipment, William can deduct the full cost of the equipment in the year of purchase, reducing his taxable income for that year.