Elaine owns an unincorporated manufacturing business In 2017

Elaine owns an unincorporated manufacturing business. In 2017, she purchases and places in service $600,000 of qualifying five year equipment for use in her business. Her taxable income from the business before any section 179 deduction is $100,000. Which of the following statements is true?

A. Elaine cannot deduct any Section 179 deduction for 2017

B. Elaine can deduct $100,000 as a Section 179 deduction in 2017 with a $400,000 carryover to next year

C. Elaine can deduct $100,000 as a Section 179 deduction in 2017 with a $500,000 carryover to the next year

D. Elaine can deduct $500,000 as a section 179 deduction in 2017

Solution

Correct option should be B Elaine can deduct $100,000 as a Section 179 deduction in 2017 with a $400,000 carryover to next year As the maximum deduction available is $500000 under section 179, so total deduction that can be availed is $500000. Now the taxable income for 2017 is $100000 so deduction of $100000 can be claimed and the remainder (500000-100000) $400000 can be carryforward If any doubt please comment. If satisfied you can rate