Fill in the blank. Emma purchased a machine in 2014, and claimed a179 expense de

Question

Fill in the blank. Emma purchased a machine in 2014, and claimed a179 expense deduction on the total purchase price. In 2016, business use dropped below 50%. As a result of this drop, Emma must: stop taking any depreciation on the machine; Change from the general Macrs to a straight line system; Recapture a prorated portion of that which was expended; Change nothing. Fill in the blank. Emma purchased a machine in 2014, and claimed a179 expense deduction on the total purchase price. In 2016, business use dropped below 50%. As a result of this drop, Emma must: stop taking any depreciation on the machine; Change from the general Macrs to a straight line system; Recapture a prorated portion of that which was expended; Change nothing. Fill in the blank. Emma purchased a machine in 2014, and claimed a179 expense deduction on the total purchase price. In 2016, business use dropped below 50%. As a result of this drop, Emma must: stop taking any depreciation on the machine; Change from the general Macrs to a straight line system; Recapture a prorated portion of that which was expended; Change nothing.

Explanation / Answer

In case the business use of an asset drops to 50% or less, then the taxpayer may have to consider to recapture the section 179 deduction. In the year the business use drops to 50% or less, the taxpayer has to include the recapture amount as ordinary income in Part IV of Form 4797. One has to also increase the property basis by the amount recaptured.

The third option is correct.

Recapture a prorated portion of that which was expended.

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