Question

During 2022, Aiden purchases $60,000 of construction equipment (seven-year property) for use in his business. Aiden has taxable income from his business of $80,000. What is the maximum amount that Aiden may deduct under the election to expense?

a) $60,000
b) $80,000
c) $0
d) $20,000

Answer 1

Aiden may deduct a maximum of a) $60,000 under the election to expense.

Step-by-step explanation:

The maximum amount that Aiden may deduct under the election to expense is $60,000. This is because under the tax law, businesses can deduct the full cost of qualifying property in the year it is placed in service, up to a certain limit. In this case, Aiden purchased $60,000 of construction equipment, which falls under the category of seven-year property. Therefore, he can deduct the entire $60,000 amount.