Question

1.Chunwei acquired and placed in service $1,250,000 of equipment on August 1, 2018 for use in her sole proprietorship. The equipment is 5-year recovery property. No other acquisitions are made during the year. Chunwei elects to expense the maximum amount under Sec. 179, and bonus depreciation is not applied. Chunwei's total deductions for 2018 (including Sec. 179 and depreciation) are

A) $1,233,000.

B) $233,000.

C) $1,165,000.

D) $1,033,000.

2.

Ahmed purchases and places in service in 2018 personal property costing $2,563,000. The taxpayer plans to apply the Sec. 179 deduction, but not bonus depreciation. What is the maximum Sec. 179 deduction that Ahmed can deduct, ignoring any taxable income limitation?

A) $2,500,000

B) $937,000

C) $1,000,000

D) $2,563,000

3.

A client placed three new business assets into service in 2018. The client has high taxable income and would like to maximize the deduction by using bonus depreciation. All of the following assets will qualify for bonus depreciation except

A) a garage for the service vans.

B) manufacturing equipment.

C) computer software.

D) All of the assets qualify for bonus depreciation.

Answer 1

Answers : -

1) B. $233,000.

Under Sec 179,if the purchase is of $2,500,000 then the taxpayer can get maximum deduction of $1,000,000. The price of equipment is $1,250,000. The equipment is not qualified for $1,000,000 deduction.

2) C. $1,000,000.

Under Sec 179, if the equipment cost is $2,500,000 or more but less than $3,500,000 the maximum deduction will be of $1,000,000.

3) D. All of the assets qualifies for bonus depreciation.

For bonus depreciation almost every tangible asset is qualified and computer is also added in the list of the qualifying assets.