Augie Purchased One New Asset During the Year (Five-Year Property)

question 8

Multiple Choice

Augie purchased one new asset during the year (five-year property) on November 10, 2017, at a cost of $660,000. She would like to use the § 179 election and will also take additional first-year depreciation. The income from the business before the cost recovery deduction and the § 179 deduction was $600,000. Determine the total cost recovery deduction with respect to the asset for 2017.

• A)$30,500
• B)$320,250
• C)$510,000
• D)$588,750
• E)None of the above

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Definitions:

Service Retailer

is a type of retailer that primarily sells services rather than tangible products, such as salons, repair shops, and fitness centers.

Oil Change

A routine maintenance service for vehicles involving the replacement of the engine's oil and oil filter to ensure proper engine function.

Off-price Retailers

Stores that sell brand name and designer merchandise at lower prices than traditional retail outlets by taking advantage of overstock, last season's products, or bulk buying.

Inventory

The complete list of items such as property, goods in stock, or the contents of a building.