Tanya owns an unincorporated manufacturing business.In 2013,she purchases and places in service $2,020,000 of qualifying five-year equipment for use in her business.Her taxable income from the business before any Sec.179 deduction is $461,000.Tanya elects to expense the maximum under Sec.179.The asset is not eligible for bonus depreciation.What is Tanya's maximum total cost recovery deduction for 2013?

Question

Quizplus · Accepted Answer

Tanya can expense up to $500,000 under Section 179, which brings her taxable income down to $-39,000. She can then take a bonus depreciation of 0% and regular MACRS depreciation of 20% (since the equipment is five-year property). This results in a total cost recovery deduction of $769,000.

Tanya Owns an Unincorporated Manufacturing Business