Assume that TDW Corporation (calendar-year-end) has 2019 taxable income of $652,000 for purposes of computing the §179 expense. The company acquired the following assets during 2019: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)
| Placed in | |||
| Asset | Service | Basis | |
| Machinery | September 12 | $ | 2,270,250 |
| Computer equipment | February 10 | 263,325 | |
| Furniture | April 2 | 880,425 | |
| Total | $ | 3,414,000 | |
b. What is the maximum total depreciation, including §179 expense, that TDW may deduct in 2019 on the assets it placed in service in 2019, assuming no bonus depreciation?
|
Description |
Amount |
Explanation |
|
(1) Property placed in service in 2019 |
3414000 |
Total qualified property |
|
(2) Threshold for §179 phase-out |
2500000 |
2019 amount [§179(b)(2)] |
|
(3) Phase-out of maximum §179 expense |
914000 |
(1) – (2) (permanently disallowed) |
|
(4) Maximum 179 expense before phase-out |
1000000 |
2019 amount [§179(b)(1)] |
|
(5) Phase-out of maximum §179 expense |
914000 |
From (3) |
|
(6) Maximum §179 expense after phase-out |
$86000 |
(4) – (5) |
|
Asset |
Original Basis |
§179Expense |
Remaining Basis |
Rate |
Depreciation Expense |
|
Machinery (7-year) |
2270250 |
86000 |
2196750 |
10.71% |
233933 |
|
Computer Equipment (5- year) |
263325 |
266575 |
35.00% |
92164 |
|
|
Furniture (7 year) |
880425 |
884675 |
17.85% |
157156 |
|
|
§179 Expense |
86000 |
||||
|
Total cost recovery |
$569253 |
Therefore,
Maximum depreciation expense = $569253
Assume that TDW Corporation (calendar-year-end) has 2019 taxable income of $652,000 for purposes of computing the...
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