Yodle Corp bought a production machine on January 1, 2018 for $31,250

Taxation May 10, 2021

Yodle Corp bought a production machine on January 1, 2018 for $31,250. The company did not elect Section 179 expensing and elected out of claiming bonus depreciation in 2018, and is depreciating the machine using the MACRS accelerated depreciation tables for 5-year property. What is the 2020 depreciation (Year 3) deduction for the machine?

a) $6,250

b) $10,000

c) $12,500

d) $6,000

e) None of these choices are correct.

Expert Solution

Computation of the 2020 depreciation deduction for machine:-

MACRS rate for 3 year = 19.20%

Depreciation = Cost * MACR rate

= $31,250 * 19.20%

= $6,000

Hence, the correct option is d) $6,000

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