Question

Which of the following statements is true to maximize Littman's total depreciation expense for 2014? (Assume that the 2013 §179 limits are extended to 2014.)

A. Littman should take §179 expense equal to the maximum $500,000.
B. Littman should take no §179 expense.
C. Littman's §179 expense will be greater than $100,000.
D. Littman's §179 expense will be less than $100,000.
E. None of these.

Answer 1

To maximize Littman's total depreciation expense for 2014, they should take the Section 179 expense equal to the maximum $500,000, assuming the 2013 limits are extended to 2014.

Step-by-step explanation:

To determine which statement is true to maximize Littman's total depreciation expense for 2014, assuming that the 2013 §179 limits are extended to 2014, we need to know the details of the Section 179 expense deduction. Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year.

If Littman wants to maximize the total depreciation expense for the year 2014, the correct statement would be A. Littman should take §179 expense equal to the maximum $500,000. This is because taking the maximum allowable deduction under Section 179 will immediately reduce the profit on which taxes are owed.