Question

77-78. Rocky bought 7-year class property on January 4, this year, for $120,000. Assume his business income is $6,000 before the deduction for the Section 179 expense.

77.     The amount of the currently deductible 179 expense is:

	a.	a.       $4,000
	b.	b.       $6,000
	c.	c.       $10,000
	78. The MACRS table percentage (if the table is to be used) which would be applied to the remaining basis of the asset to calculate cost recovery in the first year (in addition to the 179 expense) is: a. a.       .1429 b. b.       0 c. c.       .20 d. d.       None of the above	d.       None of the above

Answer 1

The Section 179 deduction limit for 2018 has been increased to $1,000,000 with a "total equipment purchased for the year" threshold of $2,500,000.

Section 179 deduction for 2017 is $500,000 with a total equipment purchased during the year threshold of $2,000,000.

Question 77: The asset value is $120,000 which is less than the threshold limit of $2,500,000. Therefore Rocky can can claim 100% asset cost ($120,000) in the year of purchase itself.

Section 179 deduction for the year, 2018 = $120,000.

However, section 179 deduction shall not be more than the business income earned during the 2018. In the present case the business income is $6,000. Threfore Section 179 deduction is limited to $6,000.

Therefore, section 179 deduction is limited to only $6,000 for the year 2018.

So, the answer is b

Question 78:

The MACRS table percentage (if the table is to be used) which would be applied to the remaining basis of the asset to calculate cost recovery in the first year (in addition to the 179 expense) is 14.29% or 0.1429

So the answer is a