YumYum Corporation (a calendar-year corporation) moved into a new office building adjacent to its manufacturing plant in 2019.It purchased and placed in service the following assets during 2019: $\begin{array}{ccr}
\underline{\text {Date Acquired}}&
\underline{\text {Asset Description}}&\underline{\text {Cost}}\
\text { March 4 } & \text { New Office Building } & \$ 850,000 \
\text { March 15 } & \text { New Computer Equipment } & 45,000 \
\text { March 25 } & \text { New Office Furniture } & \$ 25,000 \
\text { August 20 } & \text { Used Machinery } & \$ 120,000 \
\text { December 15 } & \text { New Automobile } & \$ 30.000
\end{array}$

All assets are used 100% for business use.The office building does not include the cost of the land on which it is located that was an additional $300,000.The corporation had $900,000 income from operations before calculating depreciation deductions.What is the maximum Section 179 deduction YumYum can claim for 2019?
A)$500,000
B)$253,160
C)$208,100
D)$25,000

Question

YumYum Corporation (a calendar-year corporation) moved into a new office building adjacent to its manufacturing plant in 2019.It purchased and placed in service the following assets during 2019: $\begin{array}{ccr}
\underline{\text {Date Acquired}}&
\underline{\text {Asset Description}}&\underline{\text {Cost}}\
\text { March 4 } & \text { New Office Building } & \$ 850,000 \
\text { March 15 } & \text { New Computer Equipment } & 45,000 \
\text { March 25 } & \text { New Office Furniture } & \$ 25,000 \
\text { August 20 } & \text { Used Machinery } & \$ 120,000 \
\text { December 15 } & \text { New Automobile } & \$ 30.000
\end{array}$

All assets are used 100% for business use.The office building does not include the cost of the land on which it is located that was an additional $300,000.The corporation had $900,000 income from operations before calculating depreciation deductions.What is the maximum Section 179 deduction YumYum can claim for 2019?
A)$500,000
B)$253,160
C)$208,100
D)$25,000

Quizplus · Accepted Answer

The maximum Section 179 deduction for 2019 is $1,020,000, but it begins to phase out dollar-for-dollar when more than $2,550,000 of eligible property is placed in service during the year. YumYum Corporation's total cost of eligible property (excluding the office building, as real property is not eligible for Section 179) is $220,000. This is well below the phase-out threshold, so the limitation is not a concern here. However, the business income limitation applies, which means the maximum Section 179 deduction cannot exceed the business income, which is $900,000 in this case. Given the total cost of eligible property is $220,000, the corporation can potentially claim the full cost under Section 179, but the specific limit for vehicles and the overall cap must be considered. The correct answer is based on the maximum allowable under the law and the specific assets' eligibility, leading to the conclusion that $208,100 is the maximum Section 179 deduction YumYum can claim for 2019, considering the specific limits on vehicles and other eligible property.

YumYum Corporation (A Calendar-Year Corporation) Moved into a New Office