Dain’s Diamond Bit Drilling purchased the following assets this year: Assume its

Question

Dain’s Diamond Bit Drilling purchased the following assets this year:

Assume its taxable income for the year was $67,000 before deducting any §179 expense (assume no bonus depreciation but assume that the 2014 §179 limits are extended to 2015). (Use MACRS Table 1, Table 2,Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.

a. What is the maximum amount of §179 expense Dain may deduct for the year?

b. What is Dain’s maximum depreciation expense for the year (including §179 expense)?

Dain’s Diamond Bit Drilling purchased the following assets this year:

Explanation / Answer

a. Dain can deduct the purchase pirce of the assets however the maximum limit is $500,000. He can deduct $ 500000 although the cost is $521750.

b. Depreciation cannot be claimed where Sec 179 is used. Hence total would remain $500000

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