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White Company acquires a new machine (seven-year property) on January 10, 2019, at a cost of...

White Company acquires a new machine (seven-year property) on January 10, 2019, at a cost of $620,000. White 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 2019 assuming White has taxable income of $800,000.

a. $88,598

b. $301,159

c. $568,574

d. $620,000

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Answer #1

The total deductions in calculating total income related to the machine for 2019 assuming White has taxable income of $800,000

is (d) $620,000

Explanation:In the given question we have to determine total deductions in calculating taxable income relating to the year 2019.

Cost of machine= $620,000

As per section 179 ( The Tax Cuts and Jobs Act, ) the deduction limit was increased to $1,000,000 for the year 2018 and beyond. The limit on equipment purchases has also increased to $2.5 million.

Thus the cost is fully deductible. Therefore full cost of machine i.e. $620,000 will be the total deduction.

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