Question

Chaz Corporation has taxable income in 2017 of $406,000 for purposes of computing the §179 expense and acquired the following assets during the year:

	Placed in
Asset	Service		Basis
Office furniture	September 12	$	1,180,000
Computer equipment	February 10		916,000
Delivery truck	August 21		58,000
Total		$	2,154,000

What is the maximum total depreciation expense that Chaz may deduct in 2017? (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Round your answer to the nearest whole dollar amount.)

Answer 1

Asset	Original Basis	§179 Depreciation expense	Remaining Basis	Bonus Depreciation 50%	Remaining Basis	MACR Rate	Depreciation expenses
Office furniture (7 years)	$1,180,000.00	$346,000.00	$834,000.00	$417,000.00	$417,000.00	14.29%	$59,589.30
Computer equipment (5 years)	$916,000.00		$916,000.00	$458,000.00	$458,000.00	20.00%	$91,600.00
Delivery truck (5 years)	$58,000.00		$58,000.00	$29,000.00	$29,000.00	20.00%	$5,800.00
Total	$2,154,000.00	$346,000.00		$904,000.00
§179 Depreciation expense							$346,000.00
Total Bonus Depreciation							$904,000.00
Total Depreciation Expenses							$1,406,989.30
Chaz will receive the most benefit by applying the §179 amount to the furniture 7­year property.
§179 Depreciation expense
Property placed in service (a)		$2,154,000.00
Threshold for §179 phase­out (b)		$2,000,000.00
Phase­out of maximum §179 expense (c)		$154,000.00
Maximum 179 expense before phase­out (d)	$500,000.00
Phase­out of maximum §179 expense (c)	$154,000.00
Maximum §179 expense after phase­out (d-c)	$346,000.00