Andy has operated his moving company, MoveOn, as a sole proprietorship for sever
ID: 2551243 • Letter: A
Question
Andy has operated his moving company, MoveOn, as a sole proprietorship for several years. In 2016, MoveOn placed into service $480,000 of property qualifying for immediate expensing under § 179. In 2016, Andy also joined with another local mover to form and operate a storage company, The Attic LLC. Andy holds a 90% capital and profits interest in The Attic. In 2016, The Attic purchased and placed into service $2.2 million of property qualifying for expensing under § 179. Andy has $600,000 of taxable income from MoveOn and a $750,000 share of ordinary income from his 90% ownership of The Attic, both before considering any § 179 expense. Assuming Andy wants to maximize his current deductions (without sacrificing future deductions), how much can he elect to deduct under § 179?
Explanation / Answer
Answer:
MoveOn placed into service= $480,000, Attic’s property placed into service- $2,200,000.
Total deduction available= $2,200,000 x 90%= $1,980,000 + $480,000 = $2,460,000.
Income earned $600,000 + 750,000= $1,350,000.
Total eligible for deduction is $2460,000.