During 2015, Belk Corporation purchases $25,500 worth of equipment for use in it

Question

During 2015, Belk Corporation purchases $25,500 worth of equipment for use in its business. Belk’s current taxable income before considering the Section 179 deduction is $16,500. If an amount is zero, enter "0".

a. Belk could have a Section 179 election in 2015 of $ ............... , deducting $ 16500 and carrying forward the excess of $ ........... . OR, Belk can elect to deduct $ ........... and depreciate the equipment, using a basis of $ 9000 .

b. Belk's 2016 business taxable income—before a Section 179 deduction—is $................ If Belk had a carryforward, their Section 179 deduction in 2016 is $ ............ . If Belk chose to depreciate, their Section 179 deduction in 2016 is $ 0 .

Explanation / Answer

a. Belk could have a Section 179 election in 2015 of $ 16,500.

Although Belk purchased $25,500 of qualifying Section 179 property, it can deductonly $16,500, the amount of taxable income from the business.The$8,500 ($25,000 - $16,500) excess may be carried forward to 2016.

b. Belk's 2016 business taxable income—before a Section 179 deduction—is $9,000. If Belk had a carryforward, their Section 179 deduction in 2016 is $ $ 8,500 If Belk chose to depreciate, their Section 179 deduction in 2016 is $ 9000 instead of $ 500. .

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