Question

Sam the Butcher aquires the following new ten-year class property in 2017. Use $510,000 as the maximum Section 179 amount:

Asset	Acquisition Date	Cost
A	January 10	$343,000
B	July 16	$68,000
C	November 20	$227,000

Sam elects Section 179 for Asset A first then Asset C. Sam's taxable income from the butch shop would not creat a limiltaion for purposes of Section 179 deduction. Sam elects not to take the additional first-year depreciation.

1. Determine Sam's depreciation deduction for each asset for 2017.

2. Determine Sam's total depreciation deduction for 2017.

Answer 1

Following to be taken into consideration while responding to the answer

Sam maximum amount that can be used under section 179 is $510,000 and he elects section 179 for Asset A first then Asset C.Also, his taxable income from butch shop does not create a limitation for the purposes of section 179 deduction.

Particular	Asset A	Asset B	Asset C	Total
Asset Value	$343,000	$68,000	$227,000	$638,000
Section 179 deduction	$343,000	0	$167,000	$510,000
Balance after 179 Deduction	0	$68,000	$60,000	$128,000
Normal depreciation	0	6800	$6000	12,800
Asset balance	0	$61,200	$54,000	$115,200

1. Sam Depreciation deduction for each asset for 2017

For Asset A- $343,000

For Asset B- $6,800 ( Since it is a ten year class of asset hence straight line of depreciation. In addition section 179 is not elected for this asset)

For Asset C- $173,000 First section 179 is applicable on asset A and then on Asset C.In addition the normal depreciation is applicable.

Total deprecation would be = $343,000+$6,800+$173,000=$522,800

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