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29 December, 21:41

McKenzie purchased qualifying equipment for his business that cost $212,000 in 2019. The taxable income of the business for the year is $5,600 before consideration of any $179 deduction. a. Calculate McKenzie's $179 expense deduction for 2019 and any carryover to 2020. b. How would your answer change if McKenzie decided to use additional first-year (bonus) depreciation on the equipment instead of using $179 expensing?

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  1. 29 December, 23:10
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    It will deduct up to 5,600 with any method as it cannot deduct above her current taxable income.

    The rest of the cost will be aplpied into subsequent tax periods.

    Explanation:

    The S179 deduction can only be done up to a taxaable income of zero

    Therefore, as McKenzie taxable income is $5,600 it will deduct as much as that. Leaving the rest of the depreciation for further years.

    212,000 - 5.600 = 206.400
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Home » Business » McKenzie purchased qualifying equipment for his business that cost $212,000 in 2019. The taxable income of the business for the year is $5,600 before consideration of any $179 deduction. a.
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