Crouch LLC placed in service on May 19, 2020, machinery and equipment (seven-year property) with a basis of $3,200,000. Assume that Crouch has sufficient income to avoid any limitations. Calculate the maximum depreciation deduction including §179 expensing (but ignoring bonus depreciation).

Question

Quizplus · Accepted Answer

The maximum §179 deduction for 2020 is $1,040,000. Since the basis of the property is $3,200,000, Crouch can take the full §179 deduction of $1,040,000. The remaining basis of $2,160,000 ($3,200,000 - $1,040,000) is depreciated using the MACRS method for seven-year property. However, since the question asks for the maximum deduction including §179 expensing and ignoring bonus depreciation, the answer is the §179 deduction of $1,040,000.

Crouch LLC Placed in Service on May 19, 2020, Machinery