In 2014, 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 2015, Rydin purchased tangible personalty costing $80,000. Rydin's taxable income without regard to any Section 179 deduction was $912,400. Compute Rydin's 2015 Section 179 deduction.

Question

Quizplus · Accepted Answer

In 2015, Rydin's taxable income without any Section 179 deduction was $912,400. The maximum Section 179 deduction in 2015 was $25,000. Since Rydin's taxable income is above the phase-out threshold of $200,000, the total amount of Section 179 deduction is reduced dollar-for-dollar for every dollar that exceeds the threshold. Thus, Rydin can take the full $25,000 deduction. The previous year's Section 179 does not affect the current year's deduction.

In 2014, Rydin Company Purchased One Asset Costing $38,400 and Elected