White Company Acquires a New Machine (Seven-Year Property)on January 10,2010,at

question 32

Multiple Choice

White Company acquires a new machine (seven-year property) on January 10,2010,at a cost of $900,000.White makes the election to expense the maximum amount under § 179.No election is made to use the straight-line method.If Congress reenacts additional first-year depreciation for 2010,White does elect not to take additional first-year depreciation.Determine the total deductions in calculating taxable income related to the machine for 2010 assuming White has taxable income of $500,000.

• A)$64,000.
• B)$128,610.
• C)$257,175.
• D)$500,000.
• E)None of the above.

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Definitions:

Tax Rates

The percentages at which income, property, or purchases are taxed by the government.

Tax Revenues

The fiscal resources that are obtained by governments from taxes.

Vertical Equity

A principle in taxation where taxpayers with a greater ability to pay, typically measured by income or wealth, contribute more in taxes.

Negative Externalities

Costs suffered by a third party as a result of an economic transaction that they are not directly involved in.