Question

Assume that TDW Corporation (calendar-year-end) has 2019 taxable income of $680,000 for purposes of computing the §179 expense. The company acquired the following assets during 2019:

Asset	Placed in Service	Basis
Machinery	Sept. 12	2,273,750
Computer Equipment	Feb. 10	267,875
Furniture	April 2	886,375
Total		3,428,000

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

Maximum depreciation expense

$559781

Description	Amount	Explanation
(1) Property placed in service in 2019	3428000	Total qualified property
(2) Threshold for §179 phase-out	2500000	2019 amount [§179(b)(2)]
(3) Phase-out of maximum §179 expense	928000	(1) – (2) (permanently disallowed)
(4) Maximum 179 expense before phase-out	1000000	2019 amount [§179(b)(1)]
(5) Phase-out of maximum §179 expense	928000	From (3)
(6) Maximum §179 expense after phase-out	$72000	(4) – (5)

Asset	Original Basis	§179Expense	Remaining Basis	Rate	Depreciation Expense
Machinery (7-year)	2273750	72000	2201750	10.71%	235807
Computer Equipment (5- year)	267875		267875	35.00%	93756
Furniture (7 year)	886375		886375	17.85%	158218
§179 Expense					72000
Total cost recovery	$559781

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