Ilene owns an unincorporated manufacturing business.In 2017,she purchases and places in service $2,036,000 of qualifying five-year equipment for use in her business.The property does not qualify for bonus depreciation.Her taxable income from the business before any Sec.179 deduction is $400,000.Ilene takes the maximum allowable deduction under section 179.Which of the following statements is true regarding the Sec.179 election?
A)Ilene can deduct $510,000 as a Sec.179 deduction in 2017,with no carryover to next year.
B)Ilene can deduct $504,000 as a Sec.179 deduction in 2017,with a $6,000 carryover to next year.
C)IIene can deduct $400,000 as a Sec.179 deduction in 2017; $104,000 may be carried over to next year.
D)Ilene can deduct $400,000 as a Sec.179 deduction in 2017 ,with no carryover to next year.

Question

Quizplus · Accepted Answer

C)The maximum potential Sec.179 deduction is $504,000 [$510,000 - ($2,036,000 - 2,030,000)],but it is further limited to Ilene's taxable income from the business.She has a carryover of $104,000 ($504,000 - 400,000).

Ilene Owns an Unincorporated Manufacturing Business