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    Expensing Election and MACRS Depreciation

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    Thad acquires a machine at a cost of $502,000 for use in his business and places it in service on April 1, 2009. The machine is depreciated under MACRS, with a 7-year recovery period. This machine was his only asset acquistion of the year. Thad elects to expense $250,000 of the acquistion cost under Sec. 179 but elects out of bonus depreciation.

    a. What is Thad's total depreciation deduction for the machine in 2009?

    b. Thad then sells the machine on October 5, 2011 for $80,000. Compute Thad's depreciation deductions for 2009 through 2011, the adjusted basis of the machine on October 5, 2011, and the gain or loss on the sale.

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    Solution Summary

    The solution answers questions about expensing election and MACRS depreciation.