Dains Diamond Bit Drilling purchased the following assets this year. Purchase Original Asset Date Basis Drill bits
Question:
Dain’s Diamond Bit Drilling purchased the following assets this year.
Purchase | Original | ||
Asset | Date | Basis | |
Drill bits (5-year) | January 25 | $ | 128,500 |
Drill bits (5-year) | July 25 | 141,000 | |
Commercial building | April 22 | 294,000 | |
Assume its taxable income for the year was $56,500 for purposes of computing the §179 expense (assume no bonus depreciation). (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)
a. What is the maximum amount of §179 expense Dain's may deduct for the year?
b. What is Dain’s maximum depreciation deduction for the year (including §179 expense)?
c. If the February drill bits’ original basis was $2,494,500, what is the maximum amount of §179 expense Dain's may deduct for the year?
d. If the February drill bits’ original basis was $21,834,500, what is the maximum amount of §179 expense Dain's may deduct for the year?
Essentials of Federal Taxation 2019
ISBN: 9781260190045
10th edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver