In 2016, Richmond Corporation purchases and places into service a used machine. Richmond elects Sec. 179 expensing

Question:

In 2016, Richmond Corporation purchases and places into service a used machine. Richmond elects Sec. 179 expensing for $500,000 of its $600,000 cost. The machine has a 7-year MACRS recovery period.

Assume the half-year convention applies.

a. What is Richmond's total depreciation deduction for the machine for each year of its recovery period?

b. How would your answer to Part a change if Richmond sells the machine for $220,000 on January 31, 2018? What is its gain or loss on the sale?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...