Question

In form 4562, depreciation and amortization, how to apply and compute these information if cost of personal computer $7,000, cost of printer 2,000 furniture 3,000. Elected to expense the maximum portion of the cost of the computer, printer, and furniture allowed under the provisions of Section 179. These items were placed in service on January 15, 2016 amd used 100% in the business.

Answer 1

Current scenario : Cost of total assets put to service = 12000

Date : 15th Jan 2016

Explanation of law : Basically the purpose of section 179 is to provide the benefit of deduction earlier i.e. before time by deducting more amount in initial years and accordingly less depriciation will be charged in later years, or alternatively by charging 100% deduction in first year and no deduction in subsequent years.

In the given case, assets worth rs 12,000 were elgibile for section 179 and as the question says maximum portion of these assets were allowed in section 179, and hence in the year 2016, total cost of asset can be claimed as deduction under form 4562.

However, Form 4562 also defines maximum amount in dollar beyond which the deduction can not be claimed and also it is subject to the annual income as well, in case the deduction amount exceeds taxable income, the remaining amount can be carried forward.

Maximum Limit for the year 2016 is $ 500,000 and hence $ 12,000 comes very well within the limit and total deduction by way of formn 4562 can be claimed and later on no further deductions or special deductions will be allowed as depreciation for the mentioned assets.

Thank you !!