Question

Bonnie purchased a new business asset (five-year property) on March 10, 2018, at a cost of $30,000. She also purchased a new business asset (seven-year property) on November 20, 2018, at a cost of $13,000. Bonnie did not elect to expense either of the assets under § 179, nor did she elect straight-line cost recovery. Bonnie takes additional first-year depreciation. Determine the cost recovery deduction for 2018 for these assets.

	a.	$7,858
	b.	$9,586
	c.	$21,915
	d.	$43,000
	e.	None of the above

=

James purchased a new business asset (three-year personalty) on July 23, 2018, at a cost of $40,000. James takes additional first-year depreciation but does not elect Section 179 expense on the asset. Determine the cost recovery deduction for 2018.

	a.	$8,333
	b.	$26,666
	c.	$33,333
	d.	$40,000
	e.	None of the above

Answer 1

1)

As Per Section 179, Business can take full depreciation for the New investment (made in 2018 )in the asset up to a limit of $1,000,000.

Since,Bonnies invested $43,000 only in the year 2018, he can take total amount as deduction under section 179.

Therefore option (d) is correct

2)

Additional first-year depreciation	20000	=40000*0.5
MACRS cost recovery	6666	=(40000-20000)*0.3333
Total cost recovery deduction for 2017	26666

Therefore option (b) is correct