Ilene owns an unincorporated manufacturing business.In 2016,she purchases and places in service $2,016,000 of qualifying five-year equipment for use in her business.The property does not qualify for bonus depreciation.Her taxable income from the business before any Sec.179 deduction is $400,000.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 $500,000 as a section 179 deduction in 2016,with no carryover to next year.
B)Ilene can deduct $494,000 as a section 179 deduction in 2016,with a $6,000 carryover to next year.
C)IIene can deduct $400,000 as a section 179 deduction in 2016;$94,000 may be carried over to next year.
D)Ilene can deduct $400,000 as a section 179 deduction in 2016 ,with no carryover to next year.

Question

Quizplus · Accepted Answer

The maximum amount that can be deducted under section 179 for 2016 is $500,000. However, Ilene's taxable income from the business is only $400,000, so she can only deduct up to that amount. Therefore, she can deduct $400,000 under section 179 in 2016. The remaining $94,000 can be carried over to future years.

Ilene Owns an Unincorporated Manufacturing Business