Question

White Company acquired a new machine (five-year property) on November 10, 2017, at a cost of $600,000, and immediately placed it in service. No other assets were placed in service that year. White did not make the election to expense assets under IRC § 179. White did take 50% additional first-year depreciation. Determine the total cost recovery deductions White may take with respect to this property in calculating taxable income for the calendar 2018 taxable year assuming White has taxable income of $800,000, without regard to these deductions.

a.         $114,000

b.         $310,710

c.         $342,870

d.         $385,296

e.         $390,868

Answer 1

Particulars	Amount $
Cost of asset acquired	600,000
Life	5 years
Placed on service	10th Nov 2017
Yearly Depreciation	120,000
Additional 50% depreciation for the half year in 1st year	30,000
Net Impact of Additional depreciation on the remaining life for each year	6,000
Yearly Depreciation for 2018	120,000
Depreciation claimed in 1st year	6,000
Net amount of cost recovery for 2018	114,000
Correct Answer is "a" from the given options