The only asset Bill purchased during 2016 was a new seven-year class asset.The asset,which was listed property,was acquired on June 17 at a cost of $50,000.The asset was used 40% for business,30% for the production of income,and the rest of the time for personal use.Bill always elects to expense the maximum amount under § 179 whenever it is applicable.The net income from the business before the § 179 deduction is $100,000.Determine Bill's maximum deduction with respect to the property for 2016.
A)$1,428
B)$2,499
C)$26,749
D)$33,375
E)None of the above

Question

Quizplus · Accepted Answer

The asset is used 70% for business and income production (40% + 30%). Since it is listed property and not used more than 50% for business, it does not qualify for the § 179 deduction. The maximum deduction is calculated using the MACRS depreciation method for the business use portion: $50,000 x 70% x 14.29% (half-year convention for 7-year property) = $2,499.

The Only Asset Bill Purchased During 2016 Was a New