In 2022, Richmond Corporation purchases and places into service a machine. Richmond elects Sec. 179 expensing for $1.08 million of its $1.28 million cost. The machine has a 7-year MACRS recovery period. Assume the half-year convention applies.
a. What is Richmond’s total depreciation deduction for the machine for each year of its recovery period if it elects out of bonus depreciation for 2022?
b. How would your answer to Part a change if Richmond does not elect out of bonus depreciation for 2022?
c. How would your answers to Parts a and b change if Richmond sells the machine for $430,000 on January 31, 2024? What is its gain or loss on the sale?