The recently enacted tax law (2018) allows companies to use immediate write-off equipment purchases or what they call “bonus” depreciation. This “bonus” depreciation phases out over time and is eliminated by 2025. Assume that we are now in 2025, and the tax law has reverted to the MACRS system discussed in chapter 8 (which is the way the law is written). You place the following equipment into service in the following years with the following tax lives:
Year placed Tax life Cost
Into service
Computer 2025 3 year $48,000
Car 2026 5 year $65,000
Shelves 2027 7 year $98,000
What is the total depreciation expense allowed by the IRS for all three pieces of equipment for tax years 2028? __________________
