Ilene owns an unincorporated manufacturing business.In 2014,she purchases and places in service $206,000 of qualifying five-year equipment for use in her business.Her taxable income from the business before any Sec.179 deduction is $17,000.Elaine takes the maximum allowable deduction under section 179.Which of the following statements is true regarding the Sec.179 election?
A)Ilene can deduct $25,000 as a section 179 deduction in 2014,with no carryover to next year.
B)Ilene can deduct $19,000 as a section 179 deduction in 2014.
C)IIene can deduct $17,000 as a section 179 deduction in 2014; $2,000 may be carried over to next year.
D)Ilene can deduct $17,000 as a section 179 deduction in 2014 ,with no carryover to next year.

Question

Quizplus · Accepted Answer

The maximum Section 179 deduction for 2014 is $25,000. However, the deduction is limited to the taxable income before any Section 179 deduction. In this case, Ilene's taxable income before the Section 179 deduction is $17,000, so the maximum allowable Section 179 deduction is also $17,000. The remaining $2,000 can be carried over to the following year. Therefore, option C is correct.

Ilene Owns an Unincorporated Manufacturing Business