Question

BLANK Corporation (calendar-year-end) has 2019 taxable income of $1,900,000 for purposes of computing the §179 expense. During 2019, BLANK acquired the following assets: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.-please look these up as I am unable to post them all, thank you)

	Placed in
Asset	Service		Basis
Machinery	September 12	$	1,350,000
Computer equipment	February 10		395,000
Office building	April 2		510,000
Total		$	2,255,000

a. What is the maximum amount of §179 expense BLANK may deduct for 2019?

b. What is the maximum total depreciation, including §179 expense, that BLANK may deduct in 2019 on the assets it placed in service in 2019, assuming no bonus depreciation? (Round your intermediate calculations to the nearest whole dollar amount.)

Answer 1

Section 179 Tax deduction:

Section 179 tax deduction represent a deduction that can allow a business to write off, or expense of the cost of capital expenditures in the first year rather than depreciation the cost of the fixed assets over useful life.

Two conditions need to be satisfied for claim deduction under Section 179 is as follows:

• Dollar limitation is up two $500,000 and
• Equipment must be placed into service in same tax year

A) Maximum amount of deduction in Section 179 = 395,000 ( Computer Equipment). As other two assets above the limit of $500,000 same does not qualify for deduction.

B)Maximum amount of total depreciation in 2019:

Particulars	Amount	Method	Depreciation
Machinery	13,50,000	Straight line /Declining	Depends on useful life/ rate of depreciation
Computer equipment	3,95,000	Deduction- S.179	3,95,000
Building	5,10,000	Straight line /Declining	Depends on useful life/ rate of depreciation

In the absence of rate/useful life of assets, we have provide with two alternative.

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