Chaz Corporation has taxable income in 2017 of $406,000 for purposes of computin

Question

Chaz Corporation has taxable income in 2017 of $406,000 for purposes of computing the §179 expense and acquired the following assets during the year:

What is the maximum total depreciation expense that Chaz may deduct in 2017? (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Round your answer to the nearest whole dollar amount.)

Placed in Asset Service Basis Office furniture September 12 $ 1,180,000 Computer equipment February 10 916,000 Delivery truck August 21 58,000 Total $ 2,154,000

Explanation / Answer

Asset Original Basis §179 Depreciation expense Remaining Basis Bonus Depreciation 50% Remaining Basis MACR Rate Depreciation expenses Office furniture (7 years) $1,180,000.00 $346,000.00 $834,000.00 $417,000.00 $417,000.00 14.29% $59,589.30 Computer equipment (5 years) $916,000.00 $916,000.00 $458,000.00 $458,000.00 20.00% $91,600.00 Delivery truck (5 years) $58,000.00 $58,000.00 $29,000.00 $29,000.00 20.00% $5,800.00 Total $2,154,000.00 $346,000.00 $904,000.00 §179 Depreciation expense $346,000.00 Total Bonus Depreciation $904,000.00 Total Depreciation Expenses $1,406,989.30 Chaz will receive the most benefit by applying the §179 amount to the furniture 7­year property. §179 Depreciation expense Property placed in service (a) $2,154,000.00 Threshold for §179 phase­out (b) $2,000,000.00 Phase­out of maximum §179 expense (c) $154,000.00 Maximum 179 expense before phase­out (d) $500,000.00 Phase­out of maximum §179 expense (c) $154,000.00 Maximum §179 expense after phase­out (d-c) $346,000.00

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