Question

Chaz Corporation has taxable income in 2019 of $400,000 for purposes of computing the §179 expense and acquired the following assets during the year:

	Placed in
Asset	Service		Basis
Office furniture	September 12	$	781,000
Computer equipment	February 10		914,000
Delivery truck	August 21		57,000
Qualified improvement property	September 30		1,515,000
Total		$	3,267,000

What is the maximum total depreciation deduction that Chaz may deduct in 2019? (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Round your answer to the nearest whole dollar amount.)

    

Answer 1

Ans: Maximum depreciation deduction that can be claimed in 2019 by chaz will be $2,064,077.88

Particulars	Amount($)
Property placed in service in 2019-A	3,267,000
Threshold for 179 Expense-B	(2,550,000)
Phaseout of maximum 179 Expense(A-B)	717,000
Maximum 179 Expense before phaseout C	(1,020,000)
Phaseout of maximum 179 Expense From A-B	717,000
Maximum 179 Expense after phaseout	303,000

Since most of the asset placed after half year therefore half year convention method will be used

Asset	Original Basis	179 Expense	Remaining Basis	Bonus Depreciation@100%	Remaining Basis	Rate	Depreciation Deduction
Office furniture	781,000	0	781,000	781,000	0	14.29%	0
Computer Equipment	914,000	0	914,000	914,000	0	20.00%	0
Delivery truck	57,000	0	57,000	57,000	0	20.00%	0
Qualified Improvement Property	1,515,000	303,000	1,212,000	0	1,212,000	0.749%	9,077.88
Section 179 Expense							303,000
Bonus Depreciation				(781,000+914,000+57,000)			1,752,000
Total Depreciation Deduction					(303,000+1,752,000)		2,064,077.88