On January 1,2011,Rusty,a Sole Proprietor,purchased for Use in His Business

question 3

Multiple Choice

On January 1,2011,Rusty,a sole proprietor,purchased for use in his business a new production machine (7-year property) at a cost of $60,000.Rusty did not purchase any other property during 2011 and has net income from his business of $80,000.The standard double-declining balance recovery period table would allow $8,574 of depreciation expense on the $60,000 of equipment purchased in 2011.What is Rusty's maximum depreciation deduction for 2011 if he elects to use a double-declining balance recovery period table,including the amount that could be deducted under the election to expense (Section 179) ?

• A)$500,000
• B)$80,000
• C)$68,574
• D)$60,000
• E)None of the above.

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Definitions:

Bank Service Charges

Fees charged by a bank to its customers for account maintenance, transactions, and other banking services.

Outstanding Checks

Checks that have been written and recorded in accounting books but have not yet been cashed or cleared by the bank.

Bank Statement

A summary of all transactions mailed to the depositor or made available online by the bank each month.

Petty Cash System

A method used by businesses to manage small, daily expenses, involving a small store of cash on hand.