Chahana acquired and placed in service $1,185,000 of equipment on August 1,2019 for use in her sole proprietorship.The equipment is 5-year recovery property.No other acquisitions are made during the year.Chahana elects to expense the maximum amount under Sec.179,and bonus depreciation is not applied.Chahana's total deductions for 2019 (including Sec.179 and depreciation)are
A)$1,020,000.
B)$237,000.
C)$1,185,000.
D)$1,053,000.

Question

Quizplus · Accepted Answer

Since Chahana elected to expense the maximum amount under Sec.179, she can deduct $1,020,000 (the full cost of the equipment) in the year it was placed in service. However, since bonus depreciation was not applied, she can only deduct regular depreciation on the remaining $165,000 ($1,185,000-$1,020,000) of depreciable basis. The depreciation expense for the first year using the MACRS system for 5-year property is $33,600 ($165,000/5). Therefore, Chahana's total deductions for 2019 would be $1,020,000 + $33,600 = $1,053,000.

Chahana Acquired and Placed in Service $1,185,000 of Equipment on August