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Question 31 TRX Corp placed the following assets into service during 2020: $920,000 of equipment (April 23), $500,000 of trucks (May 1), $1,400,000 of machinery (May 15), and a new $600,000 warehouse (August 8)
Question 31 TRX Corp placed the following assets into service during 2020: $920,000 of equipment (April 23), $500,000 of trucks (May 1), $1,400,000 of machinery (May 15), and a new $600,000 warehouse (August 8). The company's taxable income relevant for determining the Sec. 179 deduction is $1,000,000. What is TRX Corp's maximum Sec. 179 deduction? $1,040,000 $1,000,000 $210,000 $810,000 $260,000
Expert Solution
The Answer is $ 810,000
Calculation:
| a | Total of Qualified Assets under Section 179 [920000+500000+1400000] | $ 2,820,000 |
| b | Threshold for section 179 in 2020 | $ 2,590,000 |
| c | Maximum Section 179 expense phase out [a-b][Only if value of qualified asset is more than threshold limit] | $ 230,000 |
| d | Section 179 Maximum 2020 limit | $ 1,040,000 |
| e | Maximum Section 179 expense deductible [d-c] | $ 810,000 |
1) Taxable Income is $1,000,000, which is more than deduction under section 179 $ 810,000 so income is not considered here
.2) This question is answered based on Year 2020 rules.
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