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Sec. 179 Deduction for Qualifying Five-Year Equipment

Elaine owns an unincorporated manufacturing business. In 2011, she purchases and places in service $250,000 of qualifying five-year equipment for use in her business. Her taxable income from the business before any section 179 deduction is $70,000. Elaine takes the maximum allowable deduction under section 179. Which of the following statements is true regarding the section 179 election?

A. Elaine can deduct $128,000 as a section 179 deduction in 2011.
B. Elaine can deduct $250,000 as a section 179 deduction in 2011.
C. Elaine can deduct $70,000 as a section 179 deduction in 2011; $180,000 may be carried over to next year.
D. Elaine can deduct $70,000 as a section 179 deduction in 2011 with no carryover to next year.

Solution Preview

C. Elaine can deduct $70,000 as a section 179 deduction in 2011; $180,000 may be carried over to next ...

Solution Summary

This solution answers and explains the Sec. 179 deduction question involving qualifying five-year property. The answer is thoroughly explained and the appropriate IRS citation is referenced.

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