Lydia is the proprietor of a small business. In 2017, the business income, befor
ID: 2553352 • Letter: L
Question
Lydia is the proprietor of a small business. In 2017, the business income, before consideration of any cost recovery or 179 deduction, is 600,000. Lydia spends 705,000 on new seven year class assets (use half year convention) and elects to take the 179 deduction on them. She elects not to take additional first year depreciation. Lydias cost recovery deduction for 2017, 5 year asset purchases is 250,000. A. what is the amount of Lydias overall 179 deduction for the seven year class assets before any income limitations? b. Lydias cost recovery amount(excluding any 179 deduction) for the seven year class assets is? c. The total amount of lydias 179 deduction for the seven yeat class assets after any income limitation is? d. Lydias total cost recovery depreciation deduction (including any 179 deductionis? e. What is the amount of any 179 carryforward?
Explanation / Answer
Answer
A.
The amount of Lydias is $510000 (For 2017)overall 179 deduction for the seven year class assets before any income limitations.
B.
Lydias cost recovery amount(excluding any 179 deduction) for the seven year class assets :
=(705000-510000)*14.29%
=$195000*14.29%
=$27865.50
C.
The total amount of lydias 179 deduction for the seven yeat class assets after any income limitation:
=(600000-250000)-27865.50
=$322134.50
D.
Lydias total cost recovery depreciation deduction (including any 179 deduction:
=$600000-$250000
=$350000
E.
The amount of 179 carryforward:
=$510000-$322134.50
=$187865.50
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