Question

The only asset Bill purchased during 2017 was a new seven-year class asset.

The asset, which was listed property, was acquired on June 17 at a cost of $50,000.
The asset was used 40% for business, 30% for the production of income, and the rest of the time for personal use. Bill always elects to expense the maximum amount under § 179 whenever it is applicable.
The net income from the business before the § 179 deduction is $100,000.

Determine Bill's maximum deduction with respect to the property for 2017.

a. $1,428
b. $2,499
c. $26,749
d. $33,375
e. None of the above

Answer 1

b. $2,499

Step-by-step explanation:

The listed property does not pass the predominantly business usage test.

We cannot take 179 expensing or additional first-year depreciation (if available). In addition, only straight- line cost recovery can be used.

Maximum deduction = (50,000 * .0714 * 70%)

Maximum deduction = 2,499