During 2019, Travis purchases $13,000 of used manufacturing equipment (7-year property) for use in his business, his only asset purchase that year. Travis has taxable income from his business of $51,000 before any cost recovery. What is the maximum amount that Travis may deduct under the election to expense?

Question

During 2019, Travis purchases $13,000 of used manufacturing equipment (7-year property) for use in his business, his only asset purchase that year. Travis has taxable income from his business of $51,000 before any cost recovery. What is the maximum amount that Travis may deduct under the election to expense? ​

Quizplus · Accepted Answer

Under Section 179 of the Internal Revenue Code, businesses can elect to expense the cost of qualifying property purchased for use in the operation of a business instead of recovering the cost through depreciation over several years. In 2019, the maximum Section 179 expense deduction was $1,020,000 for qualifying property, with a phase-out threshold beginning at $2,550,000 of total equipment purchases. Since Travis's purchase of $13,000 is well below these limits and assuming the equipment qualifies, he can elect to expense the entire $13,000 in the year of purchase, provided his business income is sufficient to cover the deduction, which it is in this case.

During 2019, Travis Purchases $13,000 of Used Manufacturing Equipment (7-Year