McKenzie purchased qualifying equipment for his business that cost $212,000 in 2019. The taxable income of the business for the year is $5,600 before consideration of any $179 deduction. a. Calculate McKenzie’s $179 expense deduction for 2019 and any carryover to 2020.b. How would your answer change if McKenzie decided to use additional first-year (bonus) depreciation on the equipment instead of using $179 expensing?

It will deduct up to 5,600 with any method as it cannot deduct above her current taxable income.

The rest of the cost will be aplpied into subsequent tax periods.

Explanation:

The S179 deduction can only be done up to a taxaable income of zero

Therefore, as McKenzie taxable income is $5,600 it will deduct as much as that. Leaving the rest of the depreciation for further years.

212,000 - 5.600 = 206.400

the third answer is correct.