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Tax accounting

See attached file for full problem description.

1. Lori, who is single, purchased a new copier (five-year class property) for $30,000 and new furniture
(seven-year class property) for $112,000 on May 20, 2005. Lori expects the taxable
income derived from her business (without regard to the amount expensed under § 179)
to be about $200,000. Lori wants to elect immediate § 179 expensing, but she doesn't
know which asset she should expense under § 179.
a. Determine Lori's total deduction if the § 179 expense is first taken with respect to
the copier.

b. Determine Lori's total deduction if the § 179 expense is first taken with respect to the
furniture.

c. What is your advice to Lori?

Attachments

Solution Preview

a. Determine Lori's total deduction if the § 179 expense is first taken with respect to the copier.

Immediate expense deduction under § 179 30,000
Furniture
Immediate expense deduction under § 179 75,000 The total deduction is limited to ...

Solution Summary

The solution explains the tax deduction under § 179.

$2.19