Question

BLANK Corporation (calendar-year-end) has 2019 taxable income of $1,900,000 for purposes of computing the §179 expense. During 2019, BLANK acquired the following assets: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.-please look these up as I am unable to post them all, thank you)

	Placed in
Asset	Service		Basis
Machinery	September 12	$	1,350,000
Computer equipment	February 10		395,000
Office building	April 2		510,000
Total		$	2,255,000

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? (Round your intermediate calculations to the nearest whole dollar amount.)

Answer 1

Part A

Maximum total depreciation deduction

$1020000

Description	Amount	Explanation
(1) Property placed in service	2255000	Total of qualifying assets
(2) Threshold for §179 phase-out	(2550000)	2019 amount [§179(b)(2)]
(3) Phase-out of maximum §179 expense	0	(1) – (2) (permanently disallowed)
(4) Maximum 179 expense before phase-out	1020000	2019 amount [§179(b)(1)]
(5) Phase-out of maximum §179 expense	0	From (3)
Maximum §179 expense after phase-out	1020000	(4) – (5), not limited by taxable income

Part B

Maximum total depreciation deduction

$1147085

It is better to make use of §179 amount to the qualified improvement property and the remaining basis is recovered through regular MACRS.

Asset	Original Basis	§179 Expense	Remaining Basis	Rate	Depreciation Deduction
Machinery (7-year)	1350000	1020000	330000	14.29%	47157
Computer equipment (5- year)	395000		395000	20.00%	79000
Office building (39 year)	51000		51000	1.819%	928
§179 Expense					1020000
Total cost recovery					$1147085