In 2022, Tish acquires and places into service in her business 7-year MACRS property costing $40,000 and 5-year MACRS property costing $165,000. Tish elects Sec. 179 expensing for all of the properties’ cost. Tish’s taxable income (before the Sec. 179 and 50% of self-employment tax deductions) is $160,000.
a. What amount may Tish deduct under Sec. 179 for 2022 for the properties? What amount can she carry over to 2023?
b. What is Tish’s total 2022 depreciation deduction?
c. What are the limitations on Tish’s ability to use the Sec. 179 carryover in 2023?
d. How would your answers to Parts a, b, and c change if Tish’s 2022 business taxable income (before the Sec. 179 expense and the 50% of self-employment tax deductions) was $300,000 instead of $160,000?