Question

Dain's Diamond Bit Drilling purchased the folowing assets this year. Assume its taxable income for the year was $51.000 before deducting any 5179 expense assume to bonus depreciation) Asset Drill Bits (5-year) Drill Bits (5-year) Commercial Building Original Purchase Date Basis January 25 $90,000 July 25 96.000 April 22 220,000 What is the maximum amount of 5179 expense Dain may deduct for the year? QUESTION 2 points Save Assume that ACW Corporation has 2020 table income of $1,075,000 before the $179 experse, acquired the following sets during 2020 (assume no bonus depreciation) Placed in Service September 12 February 10 August 21 Asset Machinery Computer equipment Delivery truck Qualified leasehold improvements Total Basis $483.000 70.000 93,000 April 2 1,380,000 $2,026,000 What is the maximum amount of 5179 expense ACW may deduct for 20307

Answer 1

Question 1:-

Based on the information available in the question, we can answer as follows:-

The total amount of assets placed by Dain's Diamond Bit Drilling is $405,000. Section 179 allows Depreciation deduction upto $1,040,000 for the assets placed in service during the year. However, this amount is reduced dollar by dollar for assets placed in service exceeding $2,590,000.

Additionally, the total amount of Section 179 deduction that we can claim is limited to the Net income of the company. i.e$51,000.

Here , as the net income of the company is $51,000, the maximum amount of Section 179 expense Dain may deduct for the year is limited to $51,000

Hence, the answer is $51,000

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