The only asset Bill purchased during 2019 was a new seven-year class asset.The asset, which was listed property, was acquired on June 17 at a cost of $50,000.The asset was used 40% for business, 30% for the production of income, and the rest of the time for personal use.Bill always elects to expense the maximum amount under § 179 whenever it is applicable.The net income from the business before the § 179 deduction is $100,000.Determine Bill's maximum deduction with respect to the property for 2019.

Question

Quizplus · Accepted Answer

The asset is used 70% for business and income production (40% business + 30% income production), which qualifies it for depreciation. However, since it is listed property and not used more than 50% for business, it does not qualify for the § 179 deduction. Therefore, Bill can only take the MACRS depreciation for the business and income production use. The MACRS rate for a seven-year property in the first year is 14.29%. The deduction is 70% of $50,000 multiplied by 14.29%, which equals $2,499.

The Only Asset Bill Purchased During 2019 Was a New