Question

S, a calendar year taxpayer, made one asset purchase during 2019, manufacturing equipment costing $1,543,600. The equipment has a 7 year recovery period and was placed in service in June. Assuming S makes a Section 179 election with respect to the equipment, compute S's 2019 cost recovery deduction.

Answer 1

Answers :-

Section 179 of the United States Internal Revenue Code, allows a taxpayer to elect to deduct the cost of certain types of property on their income taxes as an expense, rather than requiring the cost of the property to be capitalized and depreciated.

The limit for section 179 is upto 10,00,000

But company can claim 100% bonus depreciation also, for amount more then 10,00,000.

So,

First year written off - 10,00,000

100% bous first year depreciation - 5,43,600

Total first year deduction. - $15,43,600