Crouch LLC placed in service on May 19, 2018 machinery and equipment (7-year property) with a basis of $3,200,000. Assume that Crouch has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (but ignoring bonus depreciation). (Use MACRS Table 1)
A) $457,280.
B) $300,000.
C) $714,410.
D) $760,072.
E) None of the choices are correct.

Question

Crouch LLC placed in service on May 19, 2018 machinery and equipment (7-year property) with a basis of $3,200,000. Assume that Crouch has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (but ignoring bonus depreciation). (Use MACRS Table 1)
A) $457,280.
B) $300,000.
C) $714,410.
D) $760,072.
E) None of the choices are correct.

Quizplus · Accepted Answer

The $1,000,000 §179 expense is reduced to $300,000 because of the property placed in service limitation ($3,200,000 − $2,500,000 threshold). The half-year convention applies. The expense is $714,410 which is depreciation of $2,900,000 × .1429 = $414,410 plus $300,000 of §179 expense.

Crouch LLC Placed in Service on May 19, 2018 Machinery