Question

Assume that TDW Corporation (calendar-year-end) has 2019 taxable income of $668,000 for purposes of computing the §179 expense. The company acquired the following assets during 2019: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)

	Placed in
Asset	Service		Basis
Machinery	September 12	$	2,272,250
Computer equipment	February 10		265,925
Furniture	April 2		883,825
Total		$	3,422,000

a. What is the maximum amount of §179 expense TDW may deduct for 2019?

b. What is the maximum total depreciation, including §179 expense, that TDW may deduct in 2019 on the assets it placed in service in 2019, assuming no bonus depreciation?

Answer 1

a.)	Description	Amount $	Explanation
	(1) Property placed in service in 2019	3,422,000	Total qualified property
	(2) Threshold for §179 phase-out	2,550,000	2019 amount [§179(b)(2)]
	(3) Phase-out of maximum §179 expense	872,000	(1) – (2) (permanently disallowed)
	(4) Maximum 179 expense before phase-out	1,020,000	2019 amount [§179(b)(1)]
	(5) Phase-out of maximum §179 expense	872,000	From (3)
	(6) Maximum §179 expense after phase-out	148,000	(4) – (5)
	Maximum amount of §179 expense	$148,000

b.)	Hafl Year convention will be used
	Asset	Original Basis $	§179Expense $	Remaining Basis $	Rate	Depreciation Expense $
	Machinery (7-year)	2,272,250	148,000	2,124,250	14.29%	303,555
	Computer Equipment (5- year)	265,925		2,65,925	20.00%	53,185
	Furniture (7 year)	883,825		8,83,825	14.29%	126,299
	§179 Expense					148,000
	Total	3,422,000				631,039
	Maximum total depreciation including §179 Expense	$ 631,039