Question

Assume that TDW Corporation (calendar-year-end) has 2017 taxable income of $650,000 for purposes of computing the §179 expense and acquired the following assets during 2017: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) Placed in Asset Service Basis Machinery October 12 $ 1,270,000 Computer equipment February 10 263,000 Furniture April 2 880,000 Total $ 2,413,000

a. What is the maximum amount of §179 expense TDW may deduct for 2017?

b. What is the maximum total depreciation expense, including §179 expense, that TDW may deduct in 2017 on the assets it placed in service in 2017 assuming no bonus depreciation? (Round your answer to the nearest whole dollar amount.)

Answer 1

The maximum §179 expense is $500,000.

Description

1. Property placed in service in 2016
2. Threshold for §179 phase-out
3. Phase-out of maximum §179 expense
4. Maximum 179 expense before phase-out
5. Phase-out of maximum §179 expense

Amount

1. $1,915,000
2. (2,010,000)
3. $-0-
4. $500,000
5. $-0

Explanation

1. Total §179qualified property

(2) 2016 amount [§179(b)(2)]

(3) (1) – (2) (permanently disallowed), not less than $0.

(4) 2016 amount [§179(b)(1)]

(5) From (3)

Therefore,

Maximum §179 expense after phase-out $500,000 (4) – (5)