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    Pyle Inc: Recovery deduction and regular depreciation

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    Pyle Inc., a calendar year taxpayer, generated over $10 million taxable income in 2008. Pyle made one asset purchase: transportation equipment costing $177,150. The equipment has a 5-year recovery period and was placed in service on February 9.

    Assuming that Pyle made the Section 179 election with respect to the equipment, compute Pyle's first-year cost recovery deduction.

    A. $128,000
    B. $137,830
    C. $35,430
    D. None of the above

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    Solution Preview

    The answer is calculated assuming you are using 2007 Section 179 limits:

    MACRS % at 20% for year 1; 32% for year 2, ...

    Solution Summary

    The solution provides the limits in the years 2007 and 2006 and shows all the calculations to arrive at an answer.