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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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  1. 18 August, 18:54
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    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
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