In August of 2013,David acquires and places into service business equipment costing $550,000.The equipment is classified as 5-year recovery property.No other acquisitions are made during the year.The property is not eligible for bonus depreciation.David elects to expense the maximum amount under Sec.179.David's total deductions for the year (including Sec.179 and depreciation)are

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Since the equipment is classified as 5-year recovery property and not eligible for bonus depreciation, the maximum amount that can be expensed under Sec.179 is $25,000. Therefore, David can deduct $25,000 for the year. The remaining cost of the equipment, $525,000, can be depreciated using the MACRS method over 5 years. The first year depreciation rate for 5-year property is 20%, so David can deduct an additional $105,000 for depreciation ($525,000 x 20%). Adding the Sec.179 deduction and depreciation deduction gives us a total deduction of $130,000 ($25,000 + $105,000). However, since the maximum amount that can be expensed under Sec.179 is $25,000, the total deduction is limited to $510,000 ($25,000 + $485,000). Therefore, the correct answer is D.

In August of 2013,David Acquires and Places into Service Business