Question

Matthew, Inc., an S corporation, purchased a depreciable asset and elected IRC Section 179 in the amount of $139,000 in 2018. Which of the following statements is true?

	A.	S corporations are not eligible for the Section 179 deduction.
	B.	S corporations cannot reduce the basis of assets by IRC Section 179.
	C.	The $139,000 Section 179 expense is deducted by Matthew, Inc.
	D.	The $139,000 Section 179 expense passes through to the shareholders.

Answer 1

Matthew, Inc., an S corporation, purchased a depreciable asset and elected IRC Section 179 in the amount of $139,000 in 2018. Which of the following statements is true?

The true statement is the $139,000 Section 179 expense is deducted by Matthew, Inc.  

Section 179 allows businesses (including S corporations), direct expense deduction that they can take for purchases of depreciable business assets which is used in business activity of the company. Instead of capitalizing and depreciating the asset; the S corporation is allowed for deduction under section 179 and it can be taken on equipment which is purchased or financed and the full amount of the purchase price is eligible for such the deduction. Therefore true statement is the $139,000 Section 179 expense is deducted by Matthew, Inc.