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A. Colonel Trautman runs a small demolition business with taxable income before any §179 expense of...

A. Colonel Trautman runs a small demolition business with taxable income before any §179 expense of $450,000. He acquired a machine for the business on February 2, 2019 for $85,000, and an office building on April 1, 2019 for $522,000. Both of the assets are new and were put in service immediately. Calculate the maximum deductions he is allowed take related to cost recovery for these assets for the year.

B. On November 12, 2020, Colonel Trautman sells the office building. How much depreciation expense can he deduct for the building in 2020?

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Answer #1

A.Eligible Investment u/s 179:-Machine for business purpose is only eligible for deduction u/s 179.Thus a deduction of 100% of $85,000 could be claimed on the aforesaid property.

For the office building a 2% depreciation could be claimed in tax returns as per applucable tax rules amouning to $7830,assuming that the office is continued to be used in the business.

Thus a maximum deduction of $92830($85,000+$7830) could be claimed while filing the income tax return.

B.If the office building is sold on November 12,2020,Colonel Trautman cannot claim any tax deductions on the said office building as per applicable tax laws.

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