ing the §179 expense. During 2017, AMP acquired the follo

AMP Corporation (calendar-year-end) has 2017 taxable income of $900,000 for purposes of computing the §179 expense. During 2017, AMP acquired the following assets: (Use MACRS

Placed in
Asset Service Basis
Machinery September 12 $ 1,480,000
Computer equipment February 10 460,000
Office building April 2 575,000
Total $ 2,515,000
a. What is the maximum amount of §179 expense AMP may deduct for 2017?

b. What is the maximum total depreciation expense, including §179 expense, that AMP may deduct in 2017 on the assets it placed in service in 2017 assuming no bonus depreciation?

Expert Answer

 

a)Description Amount Explanation

(1) Property placed in service in 2017 $ 2515000 Total §179qualifiedproperty

(2) Threshold for §179 phase-out (2,030,000) 2017 amount [§179(b)(2)]

(3) Phase-out of maximum §179 expense $-0- (1) – (2) (permanentlydisallowed),

not lessthan $0.

(4) Maximum 179 expense before phase-out $510,000 2017 amount [§179(b)(1)]

(5) Phase-out of maximum §179 expense $-0- From (3)

Maximum §179 expense after phase-out $510,000 (4) – (5)

b )Asset OriginalBasis §179Expense RemainingBasis Rate DepreciationExpense

Machinery 1480,000 510,000 970000 14.29% 138613

(7-year)

Computer 460,000 460,000 20% 92,000

Equipment(5-year)

Office building 575,000 575,000 1.819% 10459.25

(39 year)

§179 Expense 510,000

Total Depreciation Expense 751072.25

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