Sam the Butcher aquires the following new ten-year class property in 2017. Use $

Question

Sam the Butcher aquires the following new ten-year class property in 2017. Use $510,000 as the maximum Section 179 amount:

$343,000

C

Sam elects Section 179 for Asset A first then Asset C. Sam's taxable income from the butch shop would not creat a limiltaion for purposes of Section 179 deduction. Sam elects not to take the additional first-year depreciation.

1. Determine Sam's depreciation deduction for each asset for 2017.

2. Determine Sam's total depreciation deduction for 2017.

Asset Acquisition Date Cost A January 10

$343,000

B July 16 $68,000

C

November 20 $227,000

Explanation / Answer

Following to be taken into consideration while responding to the answer

Sam maximum amount that can be used under section 179 is $510,000 and he elects section 179 for Asset A first then Asset C.Also, his taxable income from butch shop does not create a limitation for the purposes of section 179 deduction.

1. Sam Depreciation deduction for each asset for 2017

For Asset A- $343,000

For Asset B- $6,800 ( Since it is a ten year class of asset hence straight line of depreciation. In addition section 179 is not elected for this asset)

For Asset C- $173,000 First section 179 is applicable on asset A and then on Asset C.In addition the normal depreciation is applicable.

Total deprecation would be = $343,000+$6,800+$173,000=$522,800

Hope this answers your query. If you have any further doubt then please let me know.

Particular Asset A Asset B Asset C Total Asset Value $343,000 $68,000 $227,000 $638,000 Section 179 deduction $343,000 0 $167,000 $510,000 Balance after 179 Deduction 0 $68,000 $60,000 $128,000 Normal depreciation 0 6800 $6000 12,800 Asset balance 0 $61,200 $54,000 $115,200

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