Question

Problem 10-61 (LO 10-2, LO 10-3) Chaz Corporation has taxable income in 2019 of $478,000 for purposes of computing the $179 expense and acquired the following assets during the year: $ Asset Office furniture Computer equipment Delivery truck Qualified improvement property Total Placed in Service September 12 February 10 August 21 September 30 Basis 781,000 902,000 51,000 1,503,000 $ 3,237,000 What is the maximum total depreciation deduction that Chaz may deduct in 2019? (Use MACRS Table 1. Table 2. Table 3, Table 4 and Table 5.) (Round your answer to the nearest whole dollar amount.) Maximum total depreciation deduction

Answer 1

Maximum total depreciation deduction $2,006,288 Description (1) Property placed in service (2) Threshold for $179 phase-out (3) Phase-out of maximum $179 expense (4) Maximum 179 expense before phase-out (5) Phase-out of maximum $179 expense Maximum $179 expense after phase-out Amount Explanation 3237000 Total of qualifying assets -2500000 2019 amount ($179(b)(2) 737000 (1)-(2) (permanently disallowed) 737000 From (3) 263000|(4)-(5), not limited by taxable income It is beneficial for Chaz to apply $179 amount to the qualified improvement property and the remaining basis is recovered through regular MACRS. Bonus depreciation is used for furniture, computers, and delivery truck. Asset Original Basis $179 Expense Depreciation Deduction Furniture (7-year) Computers (5-year) Delivery truck (5 year) Qualified improvement $179 Expense Bonus depreciation Total Depreciation Deduction 781000 9020001 51000 1503000 Remaining Basis Bonus Depreciation |Remaining Basis Rate 781000 781000 0 14.29% 902000 902000 020.00% 51000 51000 0 20.00% 263000 1240000 n/a 1240000 0.75% 9288 263000 1734000 2006288