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During the year 2020, a calendar-year taxpayer, Marvelous Munchies, a chain of specialty food shops,...

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Accounting

During the year 2020, a calendar-year taxpayer, Marvelous Munchies, a chain of specialty food shops, purchased equipment as follows:

Date Asset ___ _ Cost___

March 3 5 Year Property $600,000

October 9 5 Year Property $2,000,000

For 2020, Marvelous Munchies has taxable income equal to $910,000. Each scenario below is independent of the others unless you are told otherwise in the question.

  • What is the maximum depreciation that may be deducted for the assets this year, 2020, assuming Sec. 179 expensing and bonus depreciation are not claimed?
  • What is the maximum Sec. 179 deduction allowed for 2020 assuming that Sec. 179 is elected?
  • If the taxpayers taxable income was $610,000 rather than $910,000, how much Sec. 179 carryover would pass to the next tax year using the facts from b. above?
  • What is the maximum depreciation that may be deducted for the assets this year, 2020, assuming both Sec. 179 expensing and bonus depreciation are claimed?

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