Homework Answers
Solution:
a) McKenzie`s Sec 179 expense deduction is $ 5,600 for 2019. His Sec 179 carryover to 2020 is $ 206,400.
b) McKenzie`s Sec 179 expense deduction is $ 0 for 2019. His Sec 179 carryover to 2020 is $ 0.
Explanation:
1) As per section 179, entire $ 212,000 is eligible for deduction but there is a limitation the deduction is subjected to taxable business income. Here business income is $5,600. So, deduction is reduced to $ 5,600 and remaining cost is carryover to nest year of $ 206,400.
2) If we claim additional first year depreciation, we can claim entire amount of equipment as deduction irrespective of taxable business income. So, Section 179 will be Zero and no need to carryover to next year because we are claiming entire cost in first year.
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Exercise 8-26 (LO. 3) McKenzie purchased qualifying equipment for his business that cost $212,000 in 2019. The taxable income of the business for the year is $5,600 before consideration of any § 179 deduction. If an amount is zero, enter "0". a. Calculate McKenzie's § 179 expense deduction for 2019 and any carryover to 2020. 212,000 X § 179 expense deduction for 2019: $ 5,600 S 179 carryover to 2020: $ х b. How would your answer change if McKenzie...
Exercise 8-26 (LO. 3) McKenzie purchased qualifying equipment for his business that cost $212,000 in 2018. The taxable i...
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assume that the taxpayer has elected out of any bonus depreciation.
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Assume that the Section 179
deduction limit is $1,000,000 and that businesses exceeding a total
of $2,500,000 in purchases of qualifying personal property will
have the Section 179 deduction phase-out dollar-for-dollar. Also
assume that the taxpayer has elected out of any bonus depreciation.
Please treat each item separately.
1. Equipment in the amount of $300,000 was purchased and placed in service during the current year. Taxable income before the 179 deduction was $900,000. No other personal or real property was...
Lina purchased a new car for use in her business during 2019. The auto was the only business asset she purchased during the year and her business was extremely profitable. Calculate her maximum depreciation deductions (Including $179 expense unless stated otherwise) for the automobile in 2019 and 2020 (Lina doesn't want to take bonus depreciation for 2019 or 2020) In the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1, Table 2, and Exhibit 10-10.) a. The...
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