Mary purchased a new five-year class asset on March 7,2010.The asset was listed property (not an automobile).It was used 60% for business and the rest of the time for personal use.The asset cost $600,000.Mary made the § 179 election.The income from the business before the § 179 deduction was $300,000.If Congress reenacts additional first-year depreciation for 2010,Mary does elect not to take additional first-year depreciation.Determine the total deductions with respect to the asset for 2010.
A)$72,000.
B)$250,000.
C)$272,000.
D)$300,000.
E)None of the above.

Question

Quizplus · Accepted Answer

First, we need to determine the depreciable basis of the asset:
$600,000 x 60% = $360,000 (business use)
$360,000/5 years = $72,000 annual depreciation

Next, we need to apply the § 179 deduction:
Maximum § 179 deduction for 2010 = $500,000
$360,000 (business use) - $250,000 (§ 179 deduction) = $110,000
Note that Mary made the § 179 election, so we cannot take additional first-year depreciation.

Therefore, the total deductions with respect to the asset for 2010 are:
$250,000 (§ 179 deduction) + $72,000 (annual depreciation) = $322,000
However, we need to adjust this amount for personal use:
$322,000 x 40% (personal use percentage) = $128,800
$322,000 - $128,800 = $193,200

Thus, the correct answer is C) $272,000.

Mary Purchased a New Five-Year Class Asset on March 7,2010