Caitlyn purchases and places in service property costing $1,050,000 in 2019.She wants to elect the maximum Sec.179 deduction allowed and does not plan to apply bonus depreciation.Her business income is $900,000.What is the amount of her allowable Sec.179 deduction and carryover,if any?
A) $$\begin{array} {| l | l| }
\hline 179 \text { deduction } & \text { Carryover } \
\hline \$ 1,020,000 & 0\\hline
\end{array}$$
B) $$\begin{array} { | l | l |}
\hline 179 \text { deduction } & \text { Carryover } \
\hline\$ 900,000 & 0\\hline
\end{array}$$
C) $$\begin{array} {| l | l | }
\hline 179 \text { deduction } & \text { Carryover } \
\hline \$ 900,000 & \$ 120,000 \
\hline
\end{array}$$
D) $$\begin{array} { | l | l | }
\hline 179 \text { deduction } & \text { Carryover } \
\hline \$ 900,000 & \$ 150,000 \
\hline
\end{array}$$

Question

Caitlyn purchases and places in service property costing $1,050,000 in 2019.She wants to elect the maximum Sec.179 deduction allowed and does not plan to apply bonus depreciation.Her business income is $900,000.What is the amount of her allowable Sec.179 deduction and carryover,if any?
A) $$\begin{array} {| l | l| } 
\hline 179 \text { deduction } & \text { Carryover } \
\hline \$ 1,020,000 & 0\\hline
\end{array}$$
B) $$\begin{array} { | l | l |} 
\hline 179 \text { deduction } & \text { Carryover } \
\hline\$ 900,000 & 0\\hline
\end{array}$$
C) $$\begin{array} {| l | l | } 
\hline 179 \text { deduction } & \text { Carryover } \
\hline \$ 900,000 & \$ 120,000 \
\hline
\end{array}$$
D) $$\begin{array} { | l | l | } 
\hline 179 \text { deduction } & \text { Carryover } \
\hline \$ 900,000 & \$ 150,000 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The Sec. 179 deduction is limited to the lesser of the cost of the property or the business income. Here, the business income is $900,000, so the deduction is limited to $900,000. The remaining $150,000 ($1,050,000 - $900,000) is not deductible under Sec. 179, but only $120,000 is carried over because the deduction is limited to the business income.

Caitlyn Purchases and Places in Service Property Costing $1,050,000 in 2019.She