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Total Cost Recovery and Depreciation for Greta and Julia

Greta, a calendar-year taxpayer, acquires 5-year tangible personal property in 2009 and places the property in service on the following schedule:

Date placed in service Acquisition Cost
January 15 $ 80,000
May 25 $300,000
November 8 $258,000

Greta elects to expense the maximum under Section 179, and selects the property placed into service on November 8. She elects out of bonus depreciation. Taxable income before section 179 is $300,000. What is the total cost recovery deduction (depreciation and Sec. 179) for 2009?

On June 30, 2009, Julia purchased office furniture costing $220,000 and computers with a cost of $50,000. She elects out of bonus depreciation, but uses Sec. 179. Her business income is $300,000 without considering Sec. 179. How should she allocate the 179 election in order to maximize her total cost recovery deductions (depreciation and Sec. 179) for 2009?

Solution Preview

NOTE: The maximum Section 179 expense deduction for 2009 is $250,000.

Hence, Greta can deduct a maximum of $222,400 for 2009 under Sec. 179 and then ...

Solution Summary

This solution determines the total cost recovery and depreciation.

$2.19