Indigo Company acquires a new machine (5-year MACRS property) on February 2, 2019 at a cost of $100,000. On November 18, 2019, Indigo also acquires office equipment (7-year MACRS property) at a cost of $50,000. Indigo does not make a § 179 expense election and chooses not to take additional first-year depreciation. What is Indigo's total MACRS deduction for 2019

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valetta valetta · Answer 1 · 2019-11-13T08:47:14+01:00

Answer:

$27,145

Explanation:

Data provided in the question:

Cost of the machine = $100,000

Type of machine 5 - year MACRS property

Now,

from the MARCS table,

Depreciation rate of 5 - year MACRS property for year 1, = 20%

Therefore,

Depreciation for the machine in the year 2019 = $100,000 × 0.20

= $20,000

and,

Cost of the office equipment = $50,000

Type of equipment 7 - year MACRS property

now,

from the MARCS table,

Depreciation rate of 7 - year MACRS property for year 1, = 14.29%

Therefore,

Depreciation for the machine in the year 2019 = $50,000 × 0.1429

= $7,145

Hence,

the total deduction = $20,000 + $7,145

= $27,145