Question

Assume that Sivart Corporation has 2019 taxable income of $1,750,000 for purposes of computing the §179 expense and acquired several assets during the year. Assume the delivery truck does not qualify for bonus depreciation. (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)

	Placed in
Asset	Service		Basis
Machinery	June 12	$	1,440,000
Computer equipment	February 10		70,000
Delivery Truck-used	August 21		93,000
Furniture	April 2		310,000
Total		$	1,913,000

a. What is the maximum amount of §179 expense Sivart may deduct for 2019?

b. What is the maximum total depreciation (§179, bonus, MACRS) that Sivart may deduct in 2019 on the assets it placed in service in 2019?

Answer 1

Hi

Let me know in case you face any issue:

Answera are highlighted in yellow: Solution: Answer: a) 179 Expense for 2019: b) Total Deductible depreciation for 2019 1020000 1913000 Explanation: Half year convention will be used: Balance Life Quarter Assets Amount 179 Ded. 2nd Machinery 1440000 927000 1st Computer Eq. 70000 3rd Delivery truck - used 93000 93000 2nd Furniture 310000 Bonus Depreciation 179 Deduction 1020000 Maximum total Depreciation Expense Balance 513000 70000 0 310000 100% Bonus Dep. 513000 $ 70000 $ o $ 310000 $ 893000 5 5 Rate Depreciation 14.29% $ 20.00% $ 20.00% $ 14.29% $ 893000 1020000 1913000 7 1) 2) 3) 4) 5) 6) 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 $179 expense after phase-out (4-5) Amount 1913000 Total $179qualified property 2550000 (2019 179 limit) 0 1020000 (2019 179 limit) o from (3) 1020000 (4-5) but not below 0