Lenter LLC placed in service on April 29, 2016 machinery and equipment (7-year property) with a basis of $600,000. Assume that Lenter has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including section 179 expensing (but ignoring bonus expensing). Assume that the 2015 §179 limits are identical to 2016:
A) $85,740
B) $120,000
C) $514,290
D)$585,740
E)None of these

Question

Quizplus · Accepted Answer

The maximum depreciation expense includes the full Section 179 deduction of $500,000 (the limit for 2016) plus the MACRS depreciation for the remaining $100,000 basis. The MACRS depreciation for 7-year property in the first year is 14.29%, which is $14,290. Therefore, the total is $500,000 + $14,290 = $514,290.

Lenter LLC Placed in Service on April 29, 2016 Machinery