Question

A taxpayer places a $50,000 5-year recovery period asset in service in 2018. This is the only asset placed in service in 2018. Assuming half-year convention, no bonus depreciation, an election to expense under Section 179, and taxable income after all deductions except Section 179 of $5,000, what is the amount of Section 179 immediate expensing?

Answer 1

$5,000

Step-by-step explanation:

§ 179 depreciation allows taxpayers to deduct the cost of certain assets from the income taxes as expenses. Since the taxpayer's taxable deductions after all other deductions was $5,000, then the maximum amount that the taxpayer can deduct through § 179 depreciation is $5,000. He cannot deduct more than his income.