During the year 2020, a calendar-year taxpayer, Marvelous Munchies, a chain of specialty food shops, purchased equipment as follows:

Date                         Asset ___                     _ Cost___
March 3               5 Year Property           $   600,000
October 9            5 Year Property           $2,000,000

For 2020, Marvelous Munchies has taxable income equal to $910,000. Each scenario below is independent of the others unless you are told otherwise in the question.

• What is the maximum depreciation that may be deducted for the assets this year, 2020, assuming Sec. 179 expensing and bonus depreciation are not claimed?
• What is the maximum Sec. 179 deduction allowed for 2020 assuming that Sec. 179 is elected?
• If the taxpayer’s taxable income was $610,000 rather than $910,000, how much Sec. 179 carryover would pass to the next tax year using the facts from b. above?
• What is the maximum depreciation that may be deducted for the assets this year, 2020, assuming both Sec. 179 expensing and bonus depreciation are claimed?

Answer rating: 100% (QA)

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