Modified Accelerated Cost Recovery System (MACRS), Election to Expense (LO 8.2, 8.3) Tom has a successful business with $100,000 of taxable income before the election to expense in 2019. He purchases one new asset in 2019, a new machine which is 7-year MACRS property and costs $25,000. You are Tom's tax advisor. Complete the memorandum regarding the options you would advise for Tom and the treatment of this machine for tax purposes in 2019. Click here to access the depreciation table. If required, round your final answers to the nearest dollar. Memorandum To: Tom BusinessmanFrom: Tax Advisor One option is to utilize Section 179 which, by election, would allow you to expense $ of the cost of the machine in 2019. If the Section 179 election is not made and assuming no bonus depreciation is taken, you would be allowed a MACRS deduction of $ . Bottom line, I would recommend the Section 179 election to maximize your tax benefit in 2019.
Modified Accelerated Cost Recovery System (MACRS), Election to Expense (LO 8.2, 8.3)
Tom has a successful business with $100,000 of taxable income before the election to expense in 2019. He purchases one new asset in 2019, a new machine which is 7-year MACRS property and costs $25,000.
You are Tom's tax advisor. Complete the memorandum regarding the options you would advise for Tom and the treatment of this machine for tax purposes in 2019.
Click here to access the
If required, round your final answers to the nearest dollar.
|
Memorandum To: Tom Businessman One option is to utilize Section 179 which, by election, would allow you to expense $ of the cost of the machine in 2019. If the Section 179 election is not made and assuming no bonus depreciation is taken, you would be allowed a MACRS deduction of $ . Bottom line, I would recommend the Section 179 election to maximize your tax benefit in 2019. |
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