To claim the maximum MACRS depreciation, the company should elect to expense the maximum $112,000 allowed under Section 179 for 2007.  In addition, the company should elect to expense the assets with the longest useful life.  United’s cost recovery deduction is $144,333.

Office Equipment (7-year life):

Election to expense                                                           $  84,000

Trucks (5-year life):

Election to expense  ($112,000 – $84,000)                               28,000

Depreciable basis ($98,000 – $28,000)        $70,000

First-year depreciation (Table A10-2)        x       20%

Cost-recovery on trucks                                                        14,000

Tractor Units ( 3-year life):

Depreciable basis                                      $55,000

First-year depreciation (Table A10-2)        x  33.33%

Cost-recovery on tractor units                                              18,333

Total 2007 cost recovery                                                 $144,333