A taxpayer purchased a $10,000 computer for business use. The taxpayer wants to maximize the deduction in the current year. Assuming sufficient business income and investment limits are not exceeded, what is the optimal tax treatment?

Answer options:

Elect Section 179 expensing for the full amount.

Use MACRS 5-year depreciation.

Use Straight-line depreciation.

Capitalize and do not depreciate.

How to approach this question

Maximize Deduction = §179 or Bonus Depreciation. §179 allows full expensing up to the limit.

Full Answer

A.Elect Section 179 expensing for the full amount.✓ Correct

IRC §179 allows a taxpayer to elect to expense the cost of qualifying personal property (like computers) in the year placed in service, rather than depreciating it over time.

Common mistakes

Using MACRS when immediate expensing is available and requested.

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