Lenter LLC placed in service on April 29, 2018 machinery and equipment (7-year property) with a basis of $1,600,000. Assume that Lenter has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (but ignoring bonus expensing). (Use MACRS Table 1)
A) $228,640.
B) $1,000,000.
C) $1,085,740.
D) $1,120,000.
E) None of the choices are correct.

Question

Lenter LLC placed in service on April 29, 2018 machinery and equipment (7-year property) with a basis of $1,600,000. Assume that Lenter has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (but ignoring bonus expensing). (Use MACRS Table 1)
A) $228,640.
B) $1,000,000.
C) $1,085,740.
D) $1,120,000.
E) None of the choices are correct.

Quizplus · Accepted Answer

The $1,000,000 §179 expense is not limited. The half-year convention applies. The expense is $1,085,740 which is depreciation of $600,000  × .1429 = $85,740 plus $1,000,000 of §179 expense.

Lenter LLC Placed in Service on April 29, 2018 Machinery