Elaine owns an unincorporated manufacturing business.In 2013,she purchases and places in service $2,060,000 of qualifying five-year equipment for use in her business.Her taxable income from the business before any Sec.179 deduction is $431,000.Elaine takes the maximum allowable deduction under section 179.Which of the following statements is true regarding the Sec.179 election?

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The maximum allowable Section 179 deduction in 2013 was $500,000, but it phased out dollar-for-dollar once the total qualifying property placed in service exceeded $2,000,000. In this case, Elaine placed $2,060,000 of qualifying property in service, which is $60,000 over the phase-out threshold. Therefore, the maximum allowable Section 179 deduction is reduced by $60,000 to $440,000. However, since Elaine's taxable income from the business was $431,000, she can only deduct up to $431,000. The remaining $9,000 can be carried over to the next year.

Elaine Owns an Unincorporated Manufacturing Business