Question

The only asset Chadwick purchased during 2015 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. Chadwick 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 Chadwick's maximum deduction with respect to the property for 2015.

1) $1,428
2) $28,573
3) $50,000
4) $2,499
5) None of these choices are correct.

Answer 1

Chadwick's maximum deduction with respect to the property for 2015 is $10,000.

To determine Chadwick's maximum deduction with respect to the property for 2015, we need to calculate the amount of deduction based on the asset's business use percentage and the applicable § 179 deduction.

First, let's calculate the business use percentage of the asset. Since the asset was used 40% for business purposes, the business use percentage is 40%.

Next, let's calculate the § 179 deduction. The cost of the asset is $50,000. However, the maximum § 179 deduction limit for 2015 is $25,000. Therefore, Chadwick can claim a § 179 deduction of $25,000.

Finally, we can calculate Chadwick's maximum deduction with respect to the property for 2015. The deduction amount is calculated by multiplying the business use percentage by the § 179 deduction. So, Chadwick's maximum deduction is $25,000 * 40% = $10,000.