On July 10, 2014, Ariff places in service a new sports utility vehicle that cost $70,000 and weighed 6,300 pounds. The SUV is used 100% for business. Determine Ariff's maximum deduction for 2014, assuming Ariff's § 179 business income is $110,000. Ariff does not take additional first-year depreciation (if available).

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Quizplus · Accepted Answer

Since the SUV is used 100% for business, it is eligible for a § 179 deduction for the full cost of $70,000. However, the maximum § 179 deduction in 2014 is limited to $25,000. Therefore, Ariff can deduct $25,000 in 2014 and the remaining $45,000 must be depreciated over the useful life of the SUV. Ariff's deduction will be further limited by his § 179 business income of $110,000, which means that he can only take a § 179 deduction of up to $110,000. Therefore, Ariff's maximum deduction for 2014 is $34,000 ($25,000 + $9,000 ($110,000 - $70,000)).

On July 10, 2014, Ariff Places in Service a New