PART II: Problems and Short Answer. Please show your work to ensure maximum credit.
PROBLEM 1 (required)
Reid acquired two assets in 2022: computer equipment (5-year property) acquired on August 6th with a basis of $1,000,000 and machinery (7-year property) on November 9th with a basis of $1,000,000. Assume that Reid has sufficient income to avoid any limitations.
a. Assume Reid takes the $179 deduction first on the seven-year asset, and, if any remains, then on the five-year asset. Calculate the maximum depreciation expense, including §179 expensing, but ignoring additional first year (bonus) depreciation. Use the 2022 §179 limitations.
b. Now assume Reid takes the §179 deduction first on the five-year asset, and again, calculate the maximum depreciation expense, including §179 expensing.