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Depreciation allowed in 2006 under sec 179 and depreciation expense if sec 179 not elected

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Roberta, a sole proprietor who uses the calendar year as her tax year, acquires two business machines during 2006. Machine C, a seven-year asset, was acquired on January 20, 2006, for $80,000 and Machine D, a five-year asset, was acquired on August 1, 2006, for $40,000. No other property bylaws acquired in 2006.

a. What is the amount of depreciation that Roberta is allowed in 2006 if Sec. 179 (first-year expense election) is not elected?

b. What is the amount of depreciation that Roberta is allowed in 2006 if Sec. 179 is elected?

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Solution Summary

The solution calculates the depreciation for Roberta's machines.

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a. MACRS half year is used for calculating the depreciation on a double declining balance method. Thus the 7 year property is twice the straight line rate, (straight ...

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