Question

(A) Blue Company acquires a new machine (seven-year property) on January 10, 2018, at a cost of $620,000. Blue makes the election to expense the maximum amount under § 179, and wants to take any additional first-year depreciation allowed. No election is made to use the straight-line method. Determine the total deductions in calculating taxable income related to the machine for 2018 assuming Blue has taxable income of $800,000. (B) Susan purchased office furniture on September 20, 2017, for $100,000. On October 10, 2017, she purchased business computers for $80,000. Susan placed all of the assets in service on January 15, 2018. Susan did not elect to expense any of the assets under § 179, did not elect straight-line cost recovery, and did not take additional first-year depreciation. Determine the cost recovery deduction for the business assets for 2018.

Answer 1

Part- (A)
Calculation of total deduction allowed related to machine in 2018
Particular	Amount($)
Deduction allowed under section 179	$620,000
Section 179 deduction for 2018 are allowed upto $1 million on each individual property. Hence all whole cost of property are allowed ase section 179 expenses.
Part- (B)
Calculation of cost recovery deduction for the business assets for 2018
Particular	Amount($)
On office furniture ($100,000/7 years)	14,286
(Life of office furniture is 7 years for the purpose of cost recovery)
On Business business computers ($80,000/5 years)	16,000
(Life of office furniture is 7 years for the purpose of cost recovery)
Total cost recovery deduction for 2018	30,286