Question

[The following information applies to the questions displayed below.] Assume that Timberline Corporation has 2019 taxable income of $240,000 for purposes of computing the §179 expense. It acquired the following assets in 2019: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) Purchase Asset Date Basis Furniture (7-year) December 1 $ 450,000 Computer equipment (5-year) February 28 90,000 Copier (5-year) July 15 30,000 Machinery (7-year) May 22 480,000 Total $ 1,050,000 c. What would Timberline’s maximum depreciation deduction be for 2019 if the machinery cost $3,000,000 instead of $480,000 and assuming no bonus depreciation?

Answer 1

Section 179 deduction is not allowed as total cost of assets purchased is more than $2,550,000.

MACRS deduction is:

	(a)		(b)	(a) X (b)
Property	MACRS Basis	Recovery period	Depreciation Rate	MACRS depreciation
Furniture	$       450,000	7 year	14.29%	$   64,305.00
Computer	$         90,000	5 year	20.00%	$   18,000.00
Copier	$         30,000	5 year	20.00%	$     6,000.00
Machinery	$    3,000,000	7 year	14.29%	$ 428,700.00
Cost recovery				$ 517,005.00

Thus, total depreciation for the year is $517,005.

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