McKenzie purchased qualifying equipment for his business that cost $309,500 in 2019. The taxable income of the business for the year is $40,100 before consideration of any § 179 deduction. Calculate McKenzie’s § 179 expense deduction for 2019 and any carryover to 2020.

The correct answer is $40,100 and $269,400.

Explanation:

According to the scenario, the given data are as follows:

Cost of equipment = $309,500

Taxable income = $40,100

So, As per section 179 we know that full taxable amount is allowed as deduction.

So, Expense deduction for 2019 = Full taxable amount of 2019

Expense deduction for 2019 (acc. section 179) = $40,100

And carryover balance to 2020 = Cost of equipment - Expense deduction for 2019

Carryover balance to 2020 = $309,500 - $40,100

= $269,400

Hence, the expense deduction for 2019 is $40,100 and carryover balance to 2020 is $269,40.

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