Richie acquires the following new ten-year class property in 2017. Use $510,000
ID: 2550781 • Letter: R
Question
Richie acquires the following new ten-year class property in 2017. Use $510,000 as the maximum §179 amount:
Asset
Acquisition Date
Cost
X
January 10
340,000
Y
July 12
65,000
Z
October 20
226,500
Richie elects §179 for Asset X first and then Asset Z. Richie’s taxable income from the butcher shop would not create a limitation for purposes of the § 179 deduction. Richie elects not to take the additional first-year depreciation.
a Determine Richie’s depreciation deduction for each asset for 2017.
b Determine Richie s total depreciation deduction for 2017.
Asset
Acquisition Date
Cost
X
January 10
340,000
Y
July 12
65,000
Z
October 20
226,500
Explanation / Answer
a. Richie's Depreciation Deduction for each Asset for 2017 Asset Cost Depreciation claimed Balance X $340,000.00 $340,000.00 $0.00 Y $65,000.00 $65,000.00 Z $226,500.00 $170,000.00 $56,500.00 Total Depreciation Limit $510,000.00 b. As per Section 179, 100% of cost of Purchase deduction can be taken in the first year of purchase of asset subject to Maximum limit. In Given situation Total Asset Value $631500 but Maximum limit is $510000. Hence Maximum $510000 depreciation deduction for 2017 can be utilised.
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