ExpertHard1 markMultiple Choice
CPA · Question 53 · Area III: Property Transactions
A taxpayer purchased a $100,000 machine for business use. The taxpayer expensed $20,000 under Section 179. The remaining basis is depreciated using MACRS. What is the basis for MACRS depreciation?
A taxpayer purchased a $100,000 machine for business use. The taxpayer expensed $20,000 under Section 179. The remaining basis is depreciated using MACRS. What is the basis for MACRS depreciation?
Answer options:
A.
$100,000
B.
$80,000
C.
$20,000
D.
$0
How to approach this question
Order of Depreciation: 1. Section 179. 2. Bonus Depreciation. 3. MACRS.
Full Answer
B.$80,000✓ Correct
B
The depreciable basis for MACRS is the cost of the asset reduced by any Section 179 expense deduction taken. $100,000 - $20,000 = $80,000.
Common mistakes
Applying MACRS to the full cost.
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