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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 Summary

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

Solution Preview

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

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

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