A taxpayer places a $1,050,000 5-year recovery period asset in service in 2018.This is the only asset placed in service in 2018.Assuming half-year convention, an election to expense under Section 179, and no income limitation, what is the amount of total cost recovery deduction (no bonus depreciation)?$1,010,000

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Quizplus · Accepted Answer

Since the taxpayer made an election to expense under Section 179, the maximum amount they can deduct is $1,000,000 for 2018. However, since they only placed the $1,050,000 asset in service, the deduction is limited to the total cost of the asset minus any amount that exceeds the Section 179 limit. Therefore, the total cost recovery deduction for 2018 is $1,050,000 - $40,000 (the excess over the Section 179 limit) = $1,010,000.

A Taxpayer Places a $1,050,000 5-Year Recovery Period Asset in Service