Assume that Timberline Corporation has 2022 taxable income of $246,000 for purposes of computing the §179 expense. It acquired the following assets in 2022: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)AssetPurchase DateBasisFurniture (7-year)December 1$ 432,000Computer equipment (5-year)February 2896,000Copier (5-year)July 1536,000Machinery (7-year)May 22486,000Total $ 1,050,000 What would Timberline's maximum depreciation deduction be for 2022 if the machinery cost $3,560,000 instead of $486,000 and assuming no bonus depreciation?

Section 179 expense is a depreciation expense. It is the U.S. tax code. It allows businesses to deduct the cost of the property as an expense on their income taxes. It allows them to lower their tax liability for the current year.QuarterAssetsAmountSec. 179 expenseBalance Bonus Dep.BalanceLifeRateDepreciation4thFurniture$ 432,000-$ 432,000-$ 432,000714.29% $ 61,7331stComp. Equipment$ 96,000-$ 96,000-$ 96,000520.00% $ 19,2003rdCopier$ 36,000-$ 36,000-$ 36,000520.00% $ 7,2002ndMachinery$ 3560000-$ 3560000-$ 3,560,000714.29% $ 508,724Sec. 179 expense - Bonus Dep. - Maximum Total Depreciation Expense $ 596,857Maximum 179 deduction will be $ 0ParticularsAmount1Property placed in service in 2022 $ 4,124,000Total 179 qualified property2Threshold for 179 phase out 2022$ 2,700,000(2022 179 limit)3Phase out of maximum 179 expense (1-2)$ 1,424,0004Maximum 179 expense before phase out$ 1,080,000(2022 179 limit)5Phase out of maximum 179 expense $ 1,424,000From (3)6Maximum 179 expense after phase out (4-5)(4-5) but not below 0Timberline's maximum depreciation deduction for 2022 is $ 596,857

Answered: Assume that Timberline Corporation has…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume that Timberline Corporation has 2022 taxable income of $246,000 for purposes of computing the §179 expense. It acquired the following assets in 2022: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)

Asset	Purchase Date	Basis
Furniture (7-year)	December 1	$ 432,000
Computer equipment (5-year)	February 28	96,000
Copier (5-year)	July 15	36,000
Machinery (7-year)	May 22	486,000
Total		$ 1,050,000

What would Timberline's maximum depreciation deduction be for 2022 if the machinery cost $3,560,000 instead of $486,000 and assuming no bonus depreciation?

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