Clay LLC placed in service machinery and equipment (7-year property)with a basis of $2,450,000 on June 6,2016.Assume that Clay has sufficient income to avoid any limitations.Calculate the maximum depreciation expense including §179 expensing (ignoring any possible bonus expensing)(Use MACRS Table 1)(Round final answer to the nearest whole number)
A) $350,105
B) $427,244
C) $778,070
D) $860,105
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

- Section 179 expensing limit for 2016 is $500,000
- The maximum depreciation expense without considering Section 179 expensing is $350,000 as per MACRS Table 1.
- Therefore, maximum Section 179 expense = $500,000 - $350,000 = $150,000
- Maximum total depreciation expense with Section 179 expensing = Section 179 expense + MACRS depreciation expense
- = $150,000 + [$2,450,000 × (0.1429 + 0.2449 + 0.1749 + 0.1249 + 0.0893)] = $427,244 (rounded to the nearest whole number)

Clay LLC Placed in Service Machinery and Equipment (7-Year Property)with