ExpertHard1 markMultiple Choice
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?
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
B
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.
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