Question

Assume that Timberline Corporation has 2019 taxable income of $278,000 for purposes of computing the §179 expense. It acquired the following assets in 2019: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)

	Purchase
Asset	Date		Basis
Furniture (7-year)	December 1	$	488,000
Computer equipment (5-year)	February 28		128,000
Copier (5-year)	July 15		68,000
Machinery (7-year)	May 22		518,000
Total		$	1,202,000

Required:

1. a-1. What is the maximum amount of §179 expense Timberline may deduct for 2019?

2. a-2. What is Timberline’s §179 carryforward to 2020, if any?

Answer 1

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Answers are highlighted in yellow: Solution: Amount 1202000 Total $179qualified property 2550000 (2019 179 limit) Particulars 1) Total Cost of Property 2) Threshold for $179 phase-out-2019 3) Phase-out of maximum $179 expense (1-2) 4) 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 8) $179 expense after taxable income limitation, smaller of 6 or 7 9) $179 Carryforward to nest period (6-8) 1020000 (2019 179 limit) from (3) 1020000 Maximum upto Taxable income 278000 278000 742000