The basis of an asset on which $139,000 has been expensed under § 179 will be reduced by $139,000, even if $139,000 cannot be expensed in the current year because of the taxable income limitation.

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Quizplus · Accepted Answer

This statement is true. When an asset is expensed under § 179, the cost of the asset is immediately deducted rather than depreciated over time. However, there are limitations on the amount that can be expensed in a given year based on a taxpayer's taxable income. If the taxpayer's taxable income is not high enough to fully utilize the § 179 expense deduction, the remaining amount is carried forward to future tax years. Nonetheless, the basis of the asset must be reduced by the total amount that was expensed under § 179, even if some of that expense is carried forward to future years.

The Basis of an Asset on Which $139,000 Has Been