A taxpayer places a $50,000 5-year recovery period asset in service in 2016. This is the only asset placed in service in 2016. Assuming half-year convention, an election to expense under Section 179, and taxable income after all deductions except Section 179 of $5,000, what is the amount of Section 179 immediate expensing?

Question

A taxpayer places a $50,000 5-year recovery period asset in service in 2016. This is the only asset placed in service in 2016. Assuming half-year convention, an election to expense under Section 179, and taxable income after all deductions except Section 179 of $5,000, what is the amount of Section 179 immediate expensing?​

Quizplus · Accepted Answer

The Section 179 deduction is limited to the taxpayer's taxable income. Since the taxable income is $5,000, the maximum Section 179 deduction is also $5,000.

A Taxpayer Places a $50,000 5-Year Recovery Period Asset in Service