Question

depreciation? Lo 10.3 58. Assume that Timberline Corporation has 2018 taxable income of $240 LO 10-3 purposes of computing the $179 expense. It acquired the following assets in 2018: Asset Purchase Date Basis Furniture (7-year) Computer equipment (5-year) Copier (5-year) Machinery (7-year) Total December 1 $450,000 90,000 30,000 May 22480,000 $1,050,000 February 28 July 15

Answer 1

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Answers are highlighted in yellow: Solution: Particulars 1) Total Cost of Property 2)Threshold for $179 phase-out-2018 3) Phase-out of maximum £179 expense (1-2) Amount 1050000 Total $179qualified property 2500000 (2018 179 limit) 0 Maximum 179 expense before phase-out 5) Phase-out of maximum $179 expense 6/ Maximum §179 expense after phase-out (4.5) 7) Taxable Income before Section 179 deduction 1000000 (2018 179 limit) 0 from (3) 1000000 Maximum upto Taxable Income 240000 240000 760000 al1 8 6179 expense after taxable Income limitation, smaller of 6 or 7 a)2 9) S179 Carryforward to nest period (6-8) Answer b Depreciation Deduction: $362,601. Explanation: Half year convention will be used Quarter 4th 1st 3rd 2nd Balance Bonus Dep Life Rateepreciation 71 14.29% $ 64,305 20.00%) $ 18,000 51 20.00% $ 6,000 7| 14.29%) $ 34,296 240000 Assets Amountlec.179 Ex Off. Furniture $4,50,000 $ Computer E Copier Machine Section 179 Expense Bonus Depreciation Maximum total Depreciation Expense Balance $4,50,000 $ 90,000 $ 30,000 $2,40,00o $4,50,000 $ $ 90,000$ 90,000 $ 30,000 $ $4,80,000 $2,40,000 $2,40,000 $ $30,000 $ $2,40,000 362601

Answer c Depreciation Deduction: $517005. Explanation: Ha If year convention will be used: Balance Bonus Dep Balance 4,50,000 $ 90,000 $ 30,000 $30,00,000 Life Quarter 4th 1st 3rd 2nd Assets Amountec.179 Ex Off. Furniture $ 4,50,0004,50,000$ Computer E Copier Machine Section 179 Expense Bonus Depreciation Maximum total Depreciation Expense Rateepreciation 7| 14.29%) $ 64,305 51 20.00% $ 18,000 51 20.00% $ 6,000 71 14.29% 428700 $ 90,000 $ $ 30,000$ 30,000$ | $30,00,000 | $ $ 90,000 $ $30,00,000 $ 517005 Maximum 179 deduction will be $0: 1) 2) 3) 4) 5) 6) Particulars Property placed in service in 2018 Threshold for $179 phase-out-2018 Phase-out of maximum $179 expense (12) Maximum 179 expense before phase-out Phase-out of maximum $179 expense Maximum $179 expense after phase-out (4-5 Amount 35,70,000 Total $179qualified property 25,00,000(2018 179 limit) 10,70,000 10,00,000 (2018 179 limit) 10.70,000 from (3) (4 -5) but not below 0