In 2019 Toby Started a Schedule C business and placed in service the following two new 100% business use machines. Machi...
In 2019 Toby Started a Schedule C business and placed in service the following two new 100% business use machines.
Machine A (3 year class) on 2/15/19 cost of $87,000
Machine B (5 year class) on 11/7/19 cost of $163,000
No election is made to use the straight line method. Toby Elects not to take additional first year bonus depreciation. Toby's business profit, before any cost recovery (depreciation) deduction, is $300,000.
1. Calculate total cost recovery for 2019 if Toby takes the maximum 179.
2. Calculate total cost recovery for 2019 if Toby does not take 179.
Homework Answers
Part (1): If Toby takes the maximum 179:
For 2019, maximum 179 deduction is $1,000,000. So, full $250,000 ($87,000 + $163,000) will be allowed as depreciation since the machines are used 100% for business.
Total Cost Recovery = $250,000
Part (2): If Toby does not take 179:
Straight line depreciation will be allowed.
Machine A = $87,000/3 = $29,000
Machine B = $163000/5*50% = $16,300
Total Cost Recovery = $29,000 + $16,300 = $45,300.
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