The deduction is limited to the amount that will

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Unformatted text preview: nd timely expense election to deduct the maximum amount under code Sec. 179. Browne was not a member of any pass through entity. What is Browne's deduction under the election? a. b. c. d. $6,000 $10,000 $25,000 $30,000 CPA-02053 Explanation Choice "d" is correct. A taxpayer who spends less than $800,000 on equipment in 2008-2010 can deduct the cost of equipment purchases up to a maximum of $250,000 per tax year. The deduction is limited to the amount that will reduce taxable income to zero. Because Brown's net income is greater than the $30,000 allowable deduction, the limitation does not apply. Choice "a" is incorrect. Under Section 179 of the Internal Revenue Code, a taxpayer may elect to deduct a limited amount of the cost of property purchased for use in a trade or business. This deductible amount may be greater than the depreciation otherwise allowable under MACRS. Choices "b" and "c" are incorrect. $10,000 and $25,000 were the limitations on Section 179 deductions several years ago. 8 © 2009 DeVry/Becker...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.

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