Tax accounting - Cost Recovery on Property assignment .
You are the resident tax expert for Wetzel's Pretzels, an international producer of junk food. The controller, Amanda Wilcox, has come to you with the company's capital expenditures budget for next year. The budget shows that Wetzel's Pretzels plans to spend $2,400,000 next year on tangible personal property. The largest single item in the budget is the purchase of new, high-tech pretzel twisters costing $500,000. The pretzel twisters are on order, but because of high demand for the technology, Wetzel's Pretzels will not receive the new twisters until November. The remaining $1,900,000 is for company automobiles, delivery trucks, personal computers, and office furniture. These items will be purchased throughout the year as needed.
Ms. Wilcox asks your advice on the tax aspects of these purchases. She is particularly interested in making sure that Wetzel's Pretzels can deduct the maximum amount regarding these purchases in the year of purchase.