Question

Vermont Company acquires a used machine (ten-year property) on January 15, 2018. at a cost of $400,000. Vermont also acquires another used machine (seven-year property) on November 5, 2018 at a cost of $80,000. No election is made to use the straight-line method. The company does not make the 5 179 election. Determine the total deductions in calculating taxable income related to the machines for 2018.

a) $48,000
b) $100,000
c) None of the above
d) $51.432
e) $480,000

Answer 1

d) $51.432

Step-by-step explanation:

Deduction on 10 year Property = $400,000 * (MACRS Rate)

Deduction on 10 year Property = $400,000 * 0.10

Deduction on 10 year Property = $40,000

Deduction on 7 Year Property = $80,000 * (MACRS Rate)

Deduction on 7 Year Property = $80,000 * 0.1429

Deduction on 7 Year Property = $11,432

Total Deduction on the properties = $40,000 + $11,432

Total Deduction on the properties = $51,432