Question

AMP Corporation (calendar-year-end) has 2019 taxable income of $1,900,000 for purposes of computing the §179 expense. During 2019, AMP acquired the following assets: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)

	Placed in
Asset	Service		Basis
Machinery	September 12	$	1,530,000
Computer equipment	February 10		485,000
Office building	April 2		600,000
Total		$	2,615,000

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

b. What is the maximum total depreciation, including §179 expense, that AMP may deduct in 2019 on the assets it placed in service in 2019, assuming no bonus depreciation?

Answer 1

Ans:

1. Maximum Amount of 179 Expense AMP May deduct for 2019:

Description	Amount
A). Qualified Property placed in 2019 i.e. Machinery and Equipment	1,530,000+485,000= 2,015,000
B). Limit for Section 179 Phase-out{Limit for 2019}	(2,550,000)
C). Phase-out Maximum 179 Expense	0
D).Maximum 179 before phaseout	1,020,000
E).Phase-out of Maximum 179 Expense	0
F).Maximum 179 After phase-out	1,020,000

Hence,the maximum amount of Section 179 Expense AMP may deduct for 2019 is 1,020,000

2.

Asset	Useful life	Original Basis	179 Expense	Remaining Basis	Rate	Depreciation
Machinery	7	1,530,000	1,020,000	510,000	14,29%	72,879
Computer Equipment	5	485,000	-	485,000	20.00%	97,000
office Building	39	600,000	-	600,000	1.8190%	10,914
						180,793

Section 179 Expense =1,020,000

Total Depreciation Including Depreciation Section 179= 1,020,000+180,793: 1,200,793