Question

Required information

[The following information applies to the questions displayed below.]

Assume that Timberline Corporation has 2019 taxable income of $276,000 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	$	486,000
Computer equipment (5-year)	February 28		126,000
Copier (5-year)	July 15		66,000
Machinery (7-year)	May 22		516,000
Total		$	1,194,000

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

Solution:

a-1. The maximum amount of §179 expense Timberline may deduct for 2019 is $ 276,000

a-2. Timberline’s §179 carryforward to 2020 is $ 744,000

Calculation:

Total of Qualified Assets under Section 179	$         1,194,000
Section 179 Maximum 2019 limit	$         1,020,000
Section 179 Expense	$         1,020,000
Taxable Income before Section 179 deduction	$            276,000
Section 179 expense is subjected to income limitation	$            276,000
Section 179 Carryforward to next period in 2020 [1020000-276000]	$            744,000