Pyle Inc., a calendar year taxpayer, generated over $10 million taxable income in 2018. Pyle made one asset purchase: new heating and air conditioning system for existing nonresidential real property at a cost of $1,322,000. The system has a 39-year recovery period and was placed in service on February 9. Assuming that Pyle made the Section 179 election with respect to the acquisition, compute Pyle's 2018 cost recovery deduction.
A) $1,000,000
B) $1,007,226
C) $1,008,256
D) $1,322,000

Question

Pyle Inc., a calendar year taxpayer, generated over $10 million taxable income in 2018. Pyle made one asset purchase: new heating and air conditioning system for existing nonresidential real property at a cost of $1,322,000. The system has a 39-year recovery period and was placed in service on February 9. Assuming that Pyle made the Section 179 election with respect to the acquisition, compute Pyle's 2018 cost recovery deduction. 
A) $1,000,000
B) $1,007,226
C) $1,008,256
D) $1,322,000

Quizplus · Accepted Answer

$1,000,000 Section 179 deduction + $322,000 × 2.244%. Note that the property does NOT qualify for bonus depreciation.

Pyle Inc, a Calendar Year Taxpayer, Generated Over $10 Million Taxable