Question

Audra acquires the following new five-year class property in 2011:

Asset Acquisition Date Cost
A January 10 $106,000
B July 5 $70,000
C November 15 $1,950,000
Total $2,126,000,

Audra elects § 179 for Asset C. Audra's taxable income from her business would not create a limitation for purposes of the § 179 deduction. Audra takes additional first year depreciation. Determain her total cost recovery deduction ( including section 179 deduction) for the year.

Answer 1

Asset Acquisition Date Cost
A January 10 $106,000
B July 5 $70,000
C November 15 $1,950,000
Total $2,126,000,
Audra elects § 179 for Asset C. Audra's taxable income from her business would not create a limitation for purposes of the § 179 deduction. Audra takes additional first year depreciation. Determine her total cost recovery deduction (including section 179 deduction) for the year.
Cost recovery refers to the deduction of a portion of the cost of an asset, used in a business or for the production of income, over its useful life through depreciation, amortization, or depletion.
Depreciation is allowed for most tangible assets that are used in a trade or business or held for the production of income and that have a useful life greater than 1 year, including realty, which is land or buildings or other permanent structures on the land, and personalty, which includes all other tangible assets.