In January 20XX, JIM, purchased $350,000 of new MACRS (Modified Accelerated Cost Recovery System) 5-year property in the United States. This equipment was placed in service May 1, 20XX. JIM wants to take as much depreciation in 20XX as possible.
- Calculate the depreciation for 20XX.
- If JIM had been located in a qualified enterprise zone, what would be the depreciation amount?
- Explain the depreciation method you used.
In addition, include the tax benefits (savings) for the first year and the present value of the total tax benefits for the entire 5-year period.
- Discuss how the tax benefits and present value would change if a different method of depreciation was used.
- Also, discuss when JIM would not choose to take as much depreciation as possible.