Question

Assume that Sivart Corporation has 2018 taxable income of $1,750,000 for purposes of computing the §179 expense and acquired several assets during the year. The delivery truck was acquired in a nontaxable transaction. (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)

	Placed in
Asset	Service		Basis
Machinery	June 12	$	1,440,000
Computer equipment	February 10		70,000
Delivery Truck-used	August 21		93,000
Furniture	April 2		310,000
Total		$	1,913,000

b. What is the maximum total depreciation (§179, bonus, MACRS) that Sivart may deduct in 2018 on the assets it placed in service in 2018?

Answer 1

Maximum Section 179 Deduction limit in 2018 = 1000000

first limit will be applied to Delivery Truck-used (93000) and then remaining 907000 (1000000-93000) to machinery

Rates are applied on the basis of mid-quarter

Part B

Asset	Original Basis	§179 Expense	Remaining Basis	Bonus Depreciation	Remaining Basis	Rate	Depreciation Expense
Machinery (7-year)	1,440,000	907000	533000	266500	266500	17.85%	47570
Computers (5-year)	70,000		70000	35000	35000	35%	12250
Delivery Truck (5-year)	93,000	93000	0			15%
Furniture (7-year)	310,000		310,000	155,000	155,000	17.85%	27668
§179 Expense							1000000
Bonus depreciation							456500
Total Depreciation Expense							1543988