Margo, a calendar year taxpayer, paid $80,000 for machinery (seven-year recovery property) placed in service on August 1, 2015.
a. Assuming that the machinery was the only tangible property placed in service during the year, compute Margo’s maximum cost recovery deduction.
b. How would your computation change if Margo paid $210,000 for the machinery?
c. How would your computation change if Margo paid $300,000 for the machinery?
d. How would your answer to part a change if the machinery was placed in service in 2013?