Question

Sun Corporation ( a calendar -year corporation) purchased and placed in service the following assets during 2018

Date Acquired Asset Description Cost

February 18 Warehouse Building $ 2,450,00

June 2 Used Automobile $ 30,000

August 18 New computer equipment 220,000

September 20 New machinery 1,050,000

December 15 Used office equipment $ 885,000

All assets are used 100% for business use. The warehouse building does not include the cost of the land on which it is located which was an additional $ 1,00,000 . The corporation has #3,000,000 income from operations before calculating depreciation deductions. Sun corporation made whatever election were necessary to maximize its overall for 2018. What is the maximum Section 179 Deduction San corporation can take in 2018?

Answer 1

Section 179 allow taxpayer for 100 % deduction of capital assets in the year of purchase instead depreciating the
same over economic life. Condition and eligibility rules are as following:
(i) These capital expenses should be eligible assets i.e. Vehicle, Equipment and computer software
(ii) Land cost does not qualify for 179 deduction.
(iii) 179 deduction is allowed when these assets used for business and started to use during the year
(iv) Annual limit of deduction for 2018 under section 179 is $ 1 million for individual item of equipment &
computer software, $ 25,500 for spot utility vehicle and total deduction of $ 2.5 million for equipment .
Deduction 179 for 2019 :
	$	$
Land		Not eligible expenses
Warehouse building		Not eligible expenses
Automobile (Assumed other than passengers vehicle as full deduction allowed)		30,000
New Computer Equipment	2,20,000
New Machinery - Expensed $ 1.05 million but limited to $ 1 million	10,00,000
Office Equipment	8,85,000
Total deduction for Equipment	21,05,000
Allowed Equipment expenses up to $ 2.5 millions. So full amount allowed		21,05,000
Total deduction under section 179		21,35,000