Thad acquires a machine at a cost of $27,000 for use in his business and places it in service on April 1, 2015. The machine is depreciated under MACRS, with a 7-year recovery period. This machine was his only asset acquisition of the year. Thad elects to expense $25,000 of the acquisition cost under Sec. 179.
a. What is Thad’s total depreciation deduction for the machine in 2015?
b. Thad then sells the machine on October 5, 2017 for $10,000. Compute Thad’s depreciation deductions for 2015 through 2017, the adjusted basis of the machine on October 5, 2017, and the gain or loss on the sale.