Olga is the proprietor of a small business. In 2015, the business\'s income, bef

Question

Olga is the proprietor of a small business. In 2015, the business's income, before consideration of any cost recovery or S179 deduction, is $250,000. Olga spends $600,000 on new 7-year class assets and elects to take the S179 deduction on them. She does not claim any available additional first-year depreciation. Olga's cost recovery deduction for 2015, except for the cost recovery with respect to the new 7-year assets, is $95,000. Determine Olga's total cost recovery for 2015 with respect to the 7-year class assets and the amount of any S179 carryforward.

Explanation / Answer

cost recovery except for new 7-year assets = $95000

cost recovery with respect to new 7-year assets for year 2015 = $ Nil

Because from 1Jan,2015 onwards cost recovery/expense deduction limit is reduced to $25000 with a purchasing limit/ investing threshold of $200000 ,in this case , Olga spended $600000 on new 7-year class assets , which is not allowable for deduction.

Amount to be carried forward: Nil, because no expense deduction for the year 2015 with respect to new 7-year class assets

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