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Chaz Corporation has taxable income in 2018 of $452,000 for purposes of computing the §179 expense...

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Accounting

Chaz Corporation has taxable income in 2018 of $452,000 forpurposes of computing the §179 expense and acquired the followingassets during the year:
Assume that the qualified improvement property has satisfiedthe conditions mentioned under Section 179(f)(2).
Placed in
Asset Service Basis
Office furniture September 12 $ 781,000
Computer equipment February 10 906,000
Delivery truck August 21 53,000
Qualified improvement property September 30 1,507,000
Total $ 3,247,000
What is the maximum total depreciation deduction that Chaz maydeduct in 2018? (Use MACRS Table 1, Table 2, Table 3, Table 4 andTable 5.)

Answer & Explanation Solved by verified expert
4.4 Ratings (692 Votes)

Asset Original Basis §179 Depreciation expense Remaining Basis Bonus Depreciation 50% Remaining Basis MACR Rate Depreciation expenses
Office furniture (7 years) $781,000.00 $253,000.00 $528,000.00 $264,000.00 $264,000.00 14.29% $37,725.60
Computer equipment (5 years) $906,000.00 $906,000.00 $453,000.00 $453,000.00 20.00% $90,600.00
Delivery truck (5 years) $53,000.00 $53,000.00 $26,500.00 $26,500.00 20.00% $5,300.00
Qualified improvement property (100% bonus depreciation) $1,507,000.00 $1,507,000.00 $1,507,000.00 $0.00
Total $1,740,000.00 $253,000.00 $743,500.00
§179 Depreciation expense $253,000.00
Total Bonus Depreciation $743,500.00
Total Depreciation Expenses $1,130,125.60
Chaz will receive the most benefit by applying the §179 amount to the furniture 7­year property.
§179 Depreciation expense
Property placed in service (a) $3,247,000.00
Threshold for §179 phase­out (b) $2,500,000.00
Phase­out of maximum §179 expense (c) $747,000.00
Maximum 179 expense before phase­out (d) $1,000,000.00
Phase­out of maximum §179 expense (c) $747,000.00
Maximum §179 expense after phase­out (d-c) $253,000.00

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