Question

The only asset acquired by Don, Inc., in 2019 was a new machine with a purchase price of $1,029,000. Don’s current-year taxable income before any Sec. 179 deduction is $60,000. If Don elected to treat the maximum possible amount of this cost as an expense in the current year rather than as a capital expenditure, the basis for determining the MACRS deduction is

A. $1,029,000 B. $969,000 C. $9,000
D. $0

[6] All of the following statements regarding the Sec. 179 deduction for 2019 are true except

A. The amount that is not deductible due to the taxable income limitation can be carried forward. B. The amount expensed cannot exceed the taxable income derived from any trade or business during the tax year.
C. The maximum deductible amount is reduced if property placed in service during the tax year exceeds $2,550,000.

D. The maximum cost that is deductible for tax year 2019 is $25,000.

[8] Juliet bought and placed in service computer equipment in 2019. She paid $10,000 and received a $2,000 trade-in allowance for her old computer equipment. She had an adjusted basis of $3,000 in the old computer equipment. Juliet used both the old and new equipment 90% for business and 10% for personal purposes. Her allowable Sec. 179 expense deduction is

A. $10,000 B. $13,000 C. $12,000 D. $10,800

Answer 1