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Kaytlan purchased and placed in service a new $2,870,000 five-year class asset on October 1, 2019....

Kaytlan purchased and placed in service a new $2,870,000 five-year class asset on October 1, 2019. Assume this was the only asset purchased in 2019. Kaytlan elected to take the maximum Section 179 expense deduction allowed but elected NOT to take additional first-year (bonus) depreciation. Kaytlan’s taxable income for 2019 before the cost recovery on this asset was $600,000. Be sure to show all of your calculations for each numbered item!! You must complete the assignment on this worksheet! 1. What is the maximum amount of § 179 that Kaytlan can elect in 2019? 2. What is the maximum of the Section 179 election that Kaytlan can deduct in 2019? What happens to any Section 179 not deducted in 2019, if any?

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Answer #1

1. Maximum amount of Section 179 that Kaytlan can elect in 2019 : 1020000

2. Maximum of the Section 179 election that Kaytlan can deduct in 2019 : 700000 => {1020,000-(2870,000-2550,000)}

3. Deduction not used in 2019 (100000 in this case => 700000-600000 taxable income) shall be carried over to next year i.e. 2020

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