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 Topic: Sec 179 Deduction ( Topic Closed)
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bollymedia
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| Posted: 31 Dec 2009 at 14:02 | IP Logged
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Hey Guys, I have a question in regards to Sec 179 Depreciation Deduction. I am writing the exam on Monday (Jan 4) but have been studying from the Becker 2008 materials. I did my best to update every limitation/amounts/new tax laws possible from the Becker website, but doing some of the 2008 Becker questions have confused me a little.
In the 2009 updates, it is provided that the maximum deduction allowed for 2008-2010 Sec 179 depreciation is $250,000. The 2008 book states that the 2007 limit is $125,000 less any excess of $500,000 of the asset cost.
So here is a question:
White Company acquires a machine (seven-year property) on January 10, 2007, at a cost of $525,000. It was the only purchase of machinery White made in 2007. White makes the election to expense the maximum amount under §179. No election is made to use the straight-line method. Determine the total §179 deduction related to the machine for 2007 assuming White has taxable income of $700,000.
Ans: Choice 3 is correct.
2007 Maximum allowable §179 deduction $125,000
Reduction:
Purchases $525,000
2007 Max. Allowed (500,000)
Excess ($25,000)
Allowable §179 deduction $100,000
My question is does the reduction of the excess of $500,000 rule apply to the $250,000 limit for 2008-2010 too? Or is it just a max of $250,000 only? I cannot find any updates that mention this.
Sorry for making this long!
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cpa0123
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| Posted: 31 Dec 2009 at 14:20 | IP Logged
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The limit for Section 179 expense deduction in 2008-2010 is
$250,000. The maximum amount is reduced dollar for dollar by
the amount or property placed in service during the taxable
year that exceeds $800,000. These amounts are not indexed
for inflation. [Note: After 2010, the current tax law calls for the
maximum expense deduction under Section 179 to fall back to
the old $25,000 level!]
Updated in 2008 Becker tax law. Check this link:
http://www.becker.com/accounting/cpaexamreview/students/2008 _Edition_Tax_Update_-_Regulation_1-4.pdf
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bollymedia
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| Posted: 31 Dec 2009 at 14:25 | IP Logged
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Thank you so much CPA0123! I have the 2008 updates printed and right in front of me but never noticed it...lol. But thanks a LOT for the quick response. I appreciate it!
We don't need to know the pre-2008 limits right?
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cpa0123
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| Posted: 31 Dec 2009 at 15:04 | IP Logged
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No. Only 2009 rules to be known.
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bollymedia
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| Posted: 31 Dec 2009 at 15:18 | IP Logged
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Okay good to know...Thanks :) And Good Luck!
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