Szabi Inc, a Calendar Year Taxpayer, Purchased Two Assets During 2014

Multiple Choice

Szabi Inc., a calendar year taxpayer, purchased two assets during 2014: a machine costing $380,000 and computer equipment costing $403,500. The machine is 7-year recovery property and the computer equipment is 5-year recovery property. Which of the following statements is true?

A) Szabi should elect to expense the $380,000 cost of the machine and $120,000 of the cost of the computer equipment.
B) Szabi should elect to expense the $403,500 cost of the computer equipment machine and $96,500 of the cost of the machine.
C) Szabi must elect to expense $250,000 of the cost of the machine and $250,000 of the cost of the computer equipment.
D) Szabi is indifferent as to which costs to expense.