B&P Inc., a calendar year corporation, purchased only one operating asset during 2017: $599,900 of used computer equipment (5-year recovery property) placed in service on March 18. Assuming that B&P makes a Section 179 election, compute B&P's adjusted tax basis in the property at the end of 2017.
A) $99,900
B) $71,920
C) $79,920
D) $0

Question

B&P Inc., a calendar year corporation, purchased only one operating asset during 2017: $599,900 of used computer equipment (5-year recovery property) placed in service on March 18. Assuming that B&P makes a Section 179 election, compute B&P's adjusted tax basis in the property at the end of 2017. 
A) $99,900
B) $71,920
C) $79,920
D) $0

Quizplus · Accepted Answer

Accumulated tax depreciation is $527,980 ($510,000 Section 179 deduction + 20% × ($599,900 - $510,000). Adjusted tax basis is $71,920 ($599,900 - $527,980).

B&P Inc, a Calendar Year Corporation, Purchased Only One Operating Asset