Question 2:

Wheels-R-Us, Inc., a motorcycle wheel manufacturer, purchased a new spoke machine in 2016 for $200,000. What are the tax effects of this purchase?

I.	If taxable income is $200,000, then only $200,000 can be expensed in 2016.
II.	No Section 179 election is allowed if Wheels-R-Us decides to use a $200,000 depreciable basis.
III.	If Wheels-R-Us had purchased a total of $2,400,000 of equipment in 2016, the corporation can deduct only $100,000 of the purchases in 2016 through use of the Section 179 election.

a.	Only statement I is correct.
b.	Statements I and II are correct.
c.	Statements II and III are correct.
d.	Statements I and III are correct.
e.	Statements I, II, and III are correct.

Question 3:

In May 2016, Amy purchases 5-year MACRS property costing $150,000 and 7-year MACRS property costing $140,000. Amys income is $100,000. If Amy wishes to maximize her total 2016 cost recovery deduction, what will her total cost recovery deduction be on the properties purchased in 2016. Amy elects out of bonus depreciation.

a.	$ 50,006
b.	$130,006
c.	$135,716
d.	$143,200
e.	$290,000