Question

Required information [The following information applies to the questions displayed below.] AMP Corporation (calendar-year-end) has 2019 taxable income of $1,900,000 for purposes of computing the §179 expense. During 2019, AMP acquired the following assets: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) Placed in Service Basis Asset September 12 February 10 April 2 Machinery Computer equipment Office building $1,500,000 470,000 585,000 $2,555,000 Total b. What is the maximum total depreciation, including §179 expense, that AMP 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.) Maximum total depreciation (including §179 expense) 318,991

the 318,991 is not correct

Answer 1

For 2019, businesses can deduct full cost of equipment up to $ 1,000,000. All the machinery and equipment must be bought and put to service by 31/12/2019 so as to avail the deduction. Office building is not eligible for Section 179 expense.

Description	Amount
1. Property placed in service in 2019	1,970,000
2. Threshold for 179 phaseout	2,500,000
3. Phase-out of maximum 179 expense	0
4. Maximum 179 expense before phase-out	1,000,000
5. Phase out of maximum 179 expense	0
6. Maximum 179 phaseout expense	1,000,000

Asset	Original basis	S 179 expense	Remaining basis	Rate applicable	Amount
Machinery (7-year)	1,500,000	1,000,000	500,000	14.29%	71450
Computer Equipment (5-year)	470,000		470,000	20.00%	94000
Office building (39 year)	585,000		585,000	1.82%	10641.15
179 expense					1,000,000
Total cost recovery					$ 1,176,091

Hence, maximum total depreciation including Section 179 expense is $ 1,176,091 ( rounded off)