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A small business has a taxable income of $95,650 this year, and has purchased $118,450 of...

A small business has a taxable income of $95,650 this year, and has purchased $118,450 of business equipment eligible for a section 179 deduction. What is the maximum section 179 deduction that can be taken? Taking this deduction, what is the year 1 depreciation for the equipment? What is the end-of-year book value? Use the MACRS rates listed below.

Year 1: 20%; Year 2: 32%; Year 3: 19.2%; Year 4: 11.52%; Year 5: 11.52%; Year 6: 5.76%.

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Answer #1

What is the maximum deduction for section 179 that can be taken?
The maximum deduction for section 179, is $25,000

What is the depreciation of year 1 for the equipment?
The depreciation of year 1 is $ 18,690

What is the end-of-year accounting value?

The accounting value at the end of year 1: is $ 74,760.0
The accounting value at the end of year 2: is $ 50,836.8
The accounting value at the end of year 3: is $ 41,076.1
The accounting value at the end of year 4: is $ 36,344.1
The accounting value at the end of year 5: is $ 32,157.2
The accounting value at the end of year 6: is $ 30,304.9

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