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Practice CPA®CPA REG Practice Exam 2Question 51

Hard1 markMultiple Choice

Area III: Property TransactionsREGProperty TaxationSection 179

CPA · Question 51 · Area III: Property Transactions

A taxpayer purchased a $10,000 machine for business use. They elected to expense $6,000 under Section 179. What is the basis for MACRS depreciation?

Answer options:

A.

$10,000

B.

$4,000

C.

$6,000

D.

$0

How to approach this question

Subtract §179 expense from cost to get depreciable basis.

Full Answer

B.$4,000✓ Correct

The basis for MACRS depreciation is the cost of the asset reduced by any Section 179 expense deduction taken. $10,000 - $6,000 = $4,000.

Common mistakes

Depreciating the full cost after taking §179.

Question 50 All questions Question 52

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