Linda acquires the following new five-year class property in 2017 for her busine

Question

Linda acquires the following new five-year class property in 2017 for her business, Linda’s Dairy Farm. Use $510,000 as the maximum §179 amount:

Asset

Acquisition Date

Cost

A

January 10

$106,000

B

July 16

    70,000

C

November 20

450,000

Linda elects §179 for Asset A first and then Asset C. Linda’s taxable income from the Linda’s Dairy Farm would not create a limitation for purposes of the § 179 deduction. Linda elects to take the additional first-year depreciation also, when applicable.

a. Determine Linda’s depreciation deduction for each asset for 2017.

b. Determine Linda’s total depreciation deduction for 2017.

Asset

Acquisition Date

Cost

A

January 10

$106,000

B

July 16

    70,000

C

November 20

450,000

Explanation / Answer

Answer

A. Linda’s depreciation deduction for each asset for 2017

Asset B =70000*20% = $14000

Asset C =450000*20% =$90000

B. Linda’s total depreciation deduction for 2017

=$500000*20% =$100000

(Maximum deduction amount $500000)

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