On July 17,2013,Elise purchases office furniture (7-year property)costing $550,000 for use in her business.She wishes to use the Section 179 election.Her taxable income before the depreciation deduction is $80,000.She elects out of bonus depreciation.What is the maximum total cost recovery deduction Elise can take for the current year?

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Quizplus · Accepted Answer

Elise can use the Section 179 election up to a maximum of $500,000 for 2013. Since her furniture cost $550,000, she can only deduct up to $500,000. Her taxable income before depreciation is $80,000, which means she can deduct up to $80,000 under the Section 179 election. The remaining amount of $420,000 ($550,000 - $80,000 - $50,000) can be depreciated over 7 years using the MACRS method. Therefore, her total cost recovery deduction for the current year would be:
$80,000 (Section 179) + $67,163 (MACRS Depreciation) = $147,163.

On July 17,2013,Elise Purchases Office Furniture (7-Year Property)costing $550,000 for Use