A taxpayer places a $1,050,000 5-year recovery period asset in service in 2019. This is the only asset placed in service in 2019. Assuming half-year convention, an election to expense under Section 179, and no income limitation, what is the amount of total cost recovery deduction (no bonus depreciation) ?

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Business

Beau Koch

18 August, 16:58

A taxpayer places a $1,050,000 5-year recovery period asset in service in 2019. This is the only asset placed in service in 2019. Assuming half-year convention, an election to expense under Section 179, and no income limitation, what is the amount of total cost recovery deduction (no bonus depreciation) ?

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Kaitlynn Horne · Answer 1

hi your question lacks the options here is the options and the answer

a. $1,000,000

b. $200,000

c. $1,050,000

d. $1,026,000

e. $210,000

answer : $1026000 (D)

Explanation:

properties placed in service in 2019 = $1050000

The threshold for the year 2019 under the section 179 = $2550000

Maximum expense/deduction before phase out under the section 179 = $1020000

The depreciable value = $1050000 - $ 1020000 = $30000

The MACRS depreciation half - year convention under 5 years = 20% of depreciable value = 20% * 30000

= $6000

hence the total cost recovery = MACRS + Maximum expense/deduction

= $6000 + $1020000

= $1026000