At the beginning of its 2018 tax year, Hiram owned the following business assets.

On July 8, Hiram sold its equipment. On August 18, it purchased and placed in service new tools costing $589,000; these tools are three year recovery property. These were Hiram€™s only capital transactions for the year. Compute Hiram€™s maximum cost recovery deduction for 2018. In making your computation, assume that taxable income before depreciation exceeds $1,000,000.

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Recovery Date Placed Accumulated Depreciation Initial Cost in Service Depreciation Period Convention $30,750 70,000 $11,925 49,840 41,296 6/19/16 Furniture 7-year 5-year Half-year Half-year Half-year Equipment 5/2/15 9/30/15 58,000 5-year Machinery