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

question 106

Multiple Choice

Augie purchased one new asset during the year (five-year property) on November 10, 2012, at a cost of $450,000. She made the § 179 election.The income from the business before the cost recovery deduction and the § 179 deduction was $310,000.She takes additional first-year depreciation. Determine the total cost recovery deduction with respect to the asset for 2012.

• A)$22,500.
• B)$154,550.
• C)$302,275.
• D)$310,000.
• E)None of the above.

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Definitions:

Economics

The social science that studies how individuals, governments, firms, and nations make choices on allocating scarce resources to satisfy their unlimited wants.

Signaling

The act of conveying information indirectly through actions or attributes, often seen in markets where there is information asymmetry.

Uninformed Party

An individual or group lacking critical information, often leading to a disadvantage in decisions or negotiations.

Moral Hazard

The situation where one party engages in risky behavior because they know another party bears the consequences of that risk.