Modified Accelerated Cost Recovery System (MACRS) and Bonus Depreciation, Election to Expense (Section 179) (LO 8.2, 8.3) Tom has a successful business with $100,000 of taxable income before the election to expense in 2023. He purchases one new asset in 2023, a new machine which is seven-year MACRS property and costs $25,000. You are Tom's tax advisor. Complete the memorandum regarding the options you would advise for Tom and the treatment of this machine for tax purposes in 2023. Click here to access the depreciation table. If required, round your final answers to the nearest dollar. Memorandum To: Tom Businessman From: Tax Advisor One option is to utilize Section 179 which, by election, would allow you to expense fill in the blank 1 of 3$of the cost of the machine in 2023. If the Section 179 election is not made and assuming no bonus depreciation is taken, you would be allowed a MACRS deduction of fill in the blank 2 of 3$. Bottom line, I would recommend the fill in the blank 3 of 3 to maximize your tax benefit in 2023.
### Memorandum **To:** Tom Businessman **From:** Tax Advisor **Subject:** Depreciation Options for New Machine Purchase in 2023 **Option 1: Section 179 Election** - **Section 179 Deduction:** You can elect to expense the entire cost of the machine, which is $25,000, in 2023. This is subject to the overall Section 179 limit and your taxable income limit. Since your taxable income before the election is $100,000, you can fully utilize the Section 179 deduction. **Option 2: MACRS Depreciation (Without Bonus Depreciation)** - **MACRS Deduction:** If you do not take the Section 179 election and do not use bonus depreciation, the machine will be depreciated using the 7-year MACRS schedule. For 7-year property, the first-year MACRS rate is 14.29%. - **MACRS Deduction Calculation:** - Cost of Machine: $25,000 - First-Year MACRS Rate: 14.29% - MACRS Deduction = $25,000 * 14.29% = $3,572 **Recommendation:** - **Recommendation:** I would recommend utilizing the Section 179 election to expense the full $25,000 in 2023. This option maximizes your tax benefit by allowing you to deduct the entire cost of the machine against your taxable income,
Get your tax questions answered
Main Features
Instant Expert Advice
Get quick and accurate answers to your tax questions from our team of tax experts and artificial intelligence.
Convenient and Easy to Use
Our chatbot interface makes it easy to ask questions and get answers whenever and wherever you want.
Free Tax Question Answers
Our service is 100% risk-free, and our AI will answer all of your tax questions for free.
Fast & Accurate Answers
Our easy to use chatbot or call-in line gets you the help you need in just a few minutes. And our advanced AI makes sure that the answers you need are as accurate as possible.
ZeroTax.ai's Call-In Service
You can also get your tax questions answered by calling our phone number 855-724-1040 and speaking directly to our AI assistant on the phone! We understand that sometimes it's easier to ask your questions verbally, and we want to make sure that our service is accessible to everyone. Don't let tax questions stress you out any longer. Call us at 855-724-1040 now and let ZeroTax.ai help you.
Safe and Secure
We always make sure your information is safe by using the latest encryption technology.
Tax Pro Reviews Available
If you want a tax expert to review your answer at a low cost, we can do that for just $5 per question.
100% Satisfaction Guarantee
We're convinced of our service and back it up with a no-questions-asked 100% satisfaction guarantee.
100% Satisfaction Guarantee
Our lightning-fast tax help service is backed by a team of tax professionals who can review all answers for accuracy and completeness. We're so confident in the quality of our service, we offer you a 100% no-questions asked satisfaction guarantee.
If you're not completely satisfied with your tax answer, we'll gladly refund or credit your fee. We stand behind our service. Your satisfaction is our top priority!
Our customers get results
100%
Customer Satisfaction
100%
Questions Answered
100%
Time Saved
What customers are saying
ZeroTax.ai is a game-changer for my tax questions. Quick, accurate answers from AI and real tax pros.
Sukhtej Sidhu
Senior Analyst
I was hesitant to try a chatbot for tax advice, but ZeroTax.ai exceeded my expectations.
Lamin Ceesay
Painter
I've recommended ZeroTax.ai to all my colleagues. The convenience and expertise is unmatched.
Philip Kempisty, CPA
Entrepreneur
Affordable Tax Help
AI tax answers are 100% free, optional $50 tax pro reviews
Our service is accessible to all with free AI generated tax answers, and prices of just $5 per question if you want an optional tax pro review! Don't let taxes stress you out any longer - let ZeroTax.ai help you today.
AI Answered Tax Questions
100% Free
Get started today with your tax questions for free! No risk, no commitment, just expert tax advice at your fingertips.
- All AI tax questions answered free
- No commitment or long-term contract
- Answers in seconds
Tax Pro Reviewed Answers
Only $50
Affordable, expert tax advice for just $50 per question. Get the answers you need easily with our human-reviewed service.
- Tax professional reviewed answers
- Confirming the AI answer accurate
- Responses with in 24 hours
Our Technology
How does AI work?
Well, imagine a giant brain made up of millions of lines of code. This brain is constantly learning and analyzing vast amounts of tax-related information. When you ask your question, our technology quickly cross-references millions of pieces of tax information to find you the most relevant and up-to-date answer.
And it's even more advanced than that. Our AI technology is able to understand the written language context of your question. It takes into account your specific circumstances and provides you with tailored recommendations incorporated into your answer.
Think of it as having a personal tax expert right at your fingertips, available 24/7 to provide you with the tax information you need. Plus, our system is self-learning and constantly improving, ensuring that you always receive the most accurate advice.
Tax Tips and Tricks Right to Your Inbox
Sign up for our exclusive tax tips and tricks and always get the latest tax strategies, updates, and promotions. Don't miss out on this valuable information that will save you money and time. Tax gold right to your email.
Ready to ask your tax question?
Get started today with your tax questions for free! No risk, no commitment, just expert tax advice at your fingertips.