A taxpayer purchased and placed in service during the year a $100,000 piece of equipment. The equipment is 7-year property. The first-year depreciation for 7-year property is 14.29%. Assume that, of the allowable Sec. 179 limit for the current year, $25,000 is allocated to this piece of equipment. The taxpayer has opted out of bonus depreciation. What amount is the maximum allowable depreciation?

Question

Social Studies

Presley Frazier

31 March, 18:34

A taxpayer purchased and placed in service during the year a $100,000 piece of equipment. The equipment is 7-year property. The first-year depreciation for 7-year property is 14.29%. Assume that, of the allowable Sec. 179 limit for the current year, $25,000 is allocated to this piece of equipment. The taxpayer has opted out of bonus depreciation. What amount is the maximum allowable depreciation?

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Love · Answer 1

Answer: $35,717,50

Explanation:

Property basis = $100,000

Section 179 expense for current year = $25,000

1st year Depreciation rate = 14.29%

Adjusted basis = property basis - section 179 expense

Adjusted basis = $ (100,000 - 25,000) = $75,000

Adjusted basis * Depreciation rate

$75,000 * 14.29%

$75,000 * 0.1429 = $10,717.50

Maximum allowable Depreciation;

$ (25,000 + 10,717.50) = $35,717.50