taxgeek, yeah the question was on partnerships.
Thanks REGTaker, hopefully I get these sections down before the exam.
Sally Markey, who owns a heavy construction company, decided to spend some of her $2,000,000 2014 profit on a heavy-duty diesel truck costing $811,000 for her business. In order to lower her income taxes for the year, she decided to take the maximum Section 179 deduction plus the MACRS depreciation for 7-year property. The ceiling for Section 179 in 2014 is $25,000. No other capital assets were purchased during 2014. What is the total deduction for the truck in 2014?
A.
$25,000
Correct B.
$137,319
C.
$112,319
D.
$405,500
You are correct, the answer is B.
Sally Markey took the largest Section 179 deduction available in 2014, $25,000. This reduced the truck tax basis to $786,000 ($811,000 – $25,000). Depreciation available for the first year of MACRS is $112,319 ($786,000 × 0.1429). Total expense is $137,319 for the year ($25,000 + $112,319).
How in the world would I know how to answer this question on the exam?
.