Determine lori total deduction

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Question - If § 179 expense is first allocated to the seven-year class property, the deduction for the year would be $ larger. Lori, who is single, purchased 5-year class property for $200,000 and 7-year class property for $400,000 on May 20, 2015. Lori expects the taxable income derived from her business (without regard to the amount expensed under § 179) to be about $800,000. Lori wants to elect immediate § 179 expensing, but she doesn't know which asset she should expense under § 179. She does not claim any available additional first-year depreciation.

Note: Assume the 2014 § 179 amount is extended to 2015.

a. Determine Lori's total deduction if the § 179 expense is first taken with respect to the 5-year class asset.

b. Determine Lori's total deduction if the § 179 expense is first taken with respect to the 7-year class asset.

c. If § 179 expense is first allocated to the seven-year class property, the deduction for the year would be $ larger.

Reference no: EM132066982

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