Tom purchases a new manufacturing machine for his business on April 1, 2015 for $27,000....
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Tom purchases a new manufacturing machine for his business on April 1, 2015 for $27,000. The machine is depreciated under MACRS with a 7-year recovery period. This maachine was his only asset acquisition of this year. Thomas elects to expense $25,000 of the cost under Section 179. a. What is Tom's total deprciation deduction for the machine in 2015. b. Tom decides to sell his machine on October 5, 2017 for $10,000. Compute Tom's depreciation deduction for 2015 through 2017. The adjusted basis of the machine on October 5, 2017, and the gain or loss on the sale. (HINT: 2017 is only 1/2 year). Refer to the table on the right to calculate the MACRS depreciation MACRS Percentage Rates Recovery Period Recovery Year 3-Year 5-Year 7-Year 1 33.33 20.00 14.29 2 44.45 32.00 24.49 3 14.81 19.20 17.49 4 7.41 11.52 12.49 5 11.52 8.93 6 5.73 8.92 7 8.93 8 4.46 1 2 3 4 15 16 a. 17 18 Sec. 179 Expense MACRS Depreciation 2015 Total 19 20 21 b. 2015 R30 A D E G H M WY 12 13 7 8 14 15 16 a. 17 18 Sec. 179 Expense MACRS Depreciation 2015 Total 19 20 21 b. 22 23 24 2015 2016 2017 Accumulated Depreciation 25 26 27 Adjusted basis and gain/loss on the sale 28 29 30 31 32 Sale Price Adjusted Basis Cost Accumulated Depreciation Gain/Loss on sale 33
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