Section 179. (Obj. 2) Sand Corporation buys one asset in 2018—machinery costing $32,300,000. The machine was placed in service on June 2, 2018. Sand wants to elect the maximum Section 179 possible, even if some must be carried over to 2019. Sand’s 2018 business income limitation (taxable income before Section 179 expense, but after all other expenses, including depreciation) is $167,000.
A) Compute the maximum Section 179 Sand can elect to expense in 2018, the actual allowed 2018 expense deduction, and the Section 179 carryover to 2019.
B) What is the regular depreciation deduction on the machine (7-year property; half-year convention) after taking into account the maximum section 179 deduction and assuming no bonus depreciation is clamied?
