In August 2017,Tianshu Acquires and Places into Service 7-Year Business

question 81

Essay

In August 2017,Tianshu acquires and places into service 7-year business equipment (tangible personal property qualifying under Sec.179,but not for bonus depreciation)for $70,000.This is the only asset that she purchased during the year; her taxable income from her trade or business is $23,000.She decides to limit her Sec.179 election to the maximum amount currently deductible in her business for the current year.What is her maximum cost recovery (Sec.179 and depreciation)deduction for 2017?

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Definitions:

Net Income

The remainder of a company's total revenue after deducting taxes, expenses, and any other costs.

Shareholders' Equity

The portion of the company's assets that belongs to the shareholders after all liabilities have been subtracted.

Dividends in Arrears

Unpaid dividends of cumulative preferred stock for the designated period.

Accumulated Other Comprehensive Income

A component of shareholders' equity that includes unrealized gains and losses on certain types of investments, not recognized in the income statement.