Lenter LLC placed in service on May 20, 2016 equipment (7-year property) with a basis of $2,200,000. Assume that Lenter has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (but ignoring bonus expensing). (Assume that the 2015 §179 limits are identical to 2016.)
| $440,000. | ||
| $742,930. | ||
| $314,380. | ||
| $571,510. | ||
| None of these. |
Answer:
571,510.
Explaination
The $500,000 §179 expense is reduced to $300,000 because of the property placed in service limitation ($2,200,000 – $2,000,000 threshold). The half year convention applies. The expense is $571,510 which is depreciation of $1,900,000 × .1429 = $271,510 + $300,000 of §179 expense.
