Brad is a shareholder and full-time employee of an S corporation. During 2020, he earns a $50,910 salary from the S corporation and is allocated $11,630 as his share of its net operating loss. In addition, Brad owns a limited partnership interest from which he earns $11,630 during 2020. Kanika, Brad’s wife, operates a small business as a sole proprietorship. During 2020, she spends $70,190 on equipment for use in her business, which has a taxable income of $16,580 before the Section 179 deduction. a. Assuming that Brad and Kanika elect to expense the maximum amount under Section 179, what is the allowable deduction for 2020? Their maximum Section 179 deduction for 2020 is .................. but will be limited to ............. Feedback b. Brad is allocated $12,060 in Section 179 expense from the S corporation for 2021 and Kanika spends an additional $13,700 on equipment for use in her business. And, their taxable active business income is $35,000 for 2021. Assuming the taxpayer elects to expense the maximum amount under Section 179, what is the allowable deduction for 2021 and, if applicable, any carryforward. Complete the table below outlining their deduction. 179 Election carryforward from 2020 ................ 179 Election from S corporation ................ Equipment purchased .......... Total Section 179 elected ................ Maximum section 179 expense deduction .............. Section 179 carryforward
Brad is a shareholder and full-time employee of an S corporation. During 2020, he earns a $50,910 salary from the S corporation and is allocated $11,630 as his share of its net operating loss. In addition, Brad owns a limited partnership interest from which he earns $11,630 during 2020. Kanika, Brad’s wife, operates a small business as a sole proprietorship. During 2020, she spends $70,190 on equipment for use in her business, which has a taxable income of $16,580 before the Section 179 deduction. a. Assuming that Brad and Kanika elect to expense the maximum amount under Section 179, what is the allowable deduction for 2020? Their maximum Section 179 deduction for 2020 is .................. but will be limited to ............. Feedback b. Brad is allocated $12,060 in Section 179 expense from the S corporation for 2021 and Kanika spends an additional $13,700 on equipment for use in her business. And, their taxable active business income is $35,000 for 2021. Assuming the taxpayer elects to expense the maximum amount under Section 179, what is the allowable deduction for 2021 and, if applicable, any carryforward. Complete the table below outlining their deduction. 179 Election carryforward from 2020 ................ 179 Election from S corporation ................ Equipment purchased .......... Total Section 179 elected ................ Maximum section 179 expense deduction .............. Section 179 carryforward
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Brad is a shareholder and full-time employee of an S corporation. During 2020, he earns a $50,910 salary from the S corporation and is allocated $11,630 as his share of its net operating loss. In addition, Brad owns a limited partnership interest from which he earns $11,630 during 2020. Kanika, Brad’s wife, operates a small business as a sole proprietorship. During 2020, she spends $70,190 on equipment for use in her business, which has a taxable income of $16,580 before the Section 179 deduction.
a. Assuming that Brad and Kanika elect to expense the maximum amount under Section 179, what is the allowable deduction for 2020?
Their maximum Section 179 deduction for 2020 is .................. but will be limited to .............
b. Brad is allocated $12,060 in Section 179 expense from the S corporation for 2021 and Kanika spends an additional $13,700 on equipment for use in her business. And, their taxable active business income is $35,000 for 2021.
Assuming the taxpayer elects to expense the maximum amount under Section 179, what is the allowable deduction for 2021 and, if applicable, any carryforward. Complete the table below outlining their deduction.
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