Question

Assume that BLANK Corporation (calendar-year-end) has 2019 taxable income of $668,000 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	$	2,272,250
Computer equipment	February 10		265,925
Furniture	April 2		883,825
Total		$	3,422,000

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?

       

Answer 1

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Solution: Answers is highlighted in yellow: Year 2019: am Particulars Property placed in service in 2019 Threshold for $179 phase-out-2019 Phase-out of maximum $179 expense (1-2) Maximum 179 expense before phase-out Phase-out of maximum $179 expense Maximum Section 179 deduction for 2019 is Amount 3422000 Total $179qualified property 2550000 (2019 179 limit) 872000 1020000 (2019 179 limit) 872000 from above 148000 (1020000-872000) 631039 Answer: b) Explanation: Half year convention will be used: Quarter Assets Amount 179 Ded. 3rd Machiner (7 Yr) 2272250 148000 1st Computer equipment (5 yr) 265925 2nd Furniture (7 yr) 883825 Bonus Depreciation 179 Deduction 148000 Maximum total Depreciation Expense Balance Bonus Dep. 2124250 265925 883825 $ Balance 2124250 265925 883825 Life 7 5 Rate Depreciation 14.29% 303555 20.00% 53185 14.29% 126299 148000 631039