In 2017, Rydin Company purchased one asset costing $38,400 and elected to expense the entire cost. However, Rydin could only deduct $21,000 of the Section 179 expense because of the taxable income limitation. In 2018, Rydin purchased tangible personalty costing $990,000. Rydin's taxable income without regard to any Section 179 deduction was $1,912,400. Compute Rydin's 2018 Section 179 deduction.
A) $17,400
B) $1,000,000
C) $1,007,400
D) $0

Question

In 2017, Rydin Company purchased one asset costing $38,400 and elected to expense the entire cost. However, Rydin could only deduct $21,000 of the Section 179 expense because of the taxable income limitation. In 2018, Rydin purchased tangible personalty costing $990,000. Rydin's taxable income without regard to any Section 179 deduction was $1,912,400. Compute Rydin's 2018 Section 179 deduction. 
A) $17,400
B) $1,000,000
C) $1,007,400
D) $0

Quizplus · Accepted Answer

Rydin's carryover expense from 2017 is $17,400 ($38,400 expense - $21,000 deduction). This carryover plus the $990,000 cost of qualifying property purchased in 2017 exceed the $1,000,000 limited dollar amount for the year. Consequently, Rydin's deduction is limited to $1,000,000.

In 2017, Rydin Company Purchased One Asset Costing $38,400 and Elected