Belsap Inc., a calendar year taxpayer, purchased a total of $590,000 depreciable personalty during May 2017. Which of the following statements is true?
A) Belsap can elect to expense 100% of the cost.
B) The amount of cost that Belsap can elect to expense depends on Belsap's 2017 taxable income.
C) Belsap can elect to expense $510,000 of the cost. The $80,000 remaining cost is capitalized and subject to MACRS depreciation.
D) Belsap can elect to expense $510,000 of the cost. The $80,000 remaining cost is capitalized and is not depreciable.

Question

Belsap Inc., a calendar year taxpayer, purchased a total of $590,000 depreciable personalty during May 2017. Which of the following statements is true? 
A) Belsap can elect to expense 100% of the cost.
B) The amount of cost that Belsap can elect to expense depends on Belsap's 2017 taxable income.
C) Belsap can elect to expense $510,000 of the cost. The $80,000 remaining cost is capitalized and subject to MACRS depreciation.
D) Belsap can elect to expense $510,000 of the cost. The $80,000 remaining cost is capitalized and is not depreciable.

Quizplus · Accepted Answer

The taxable income limitation applies to the deduction for the Section 179 expense and not the expense itself.