Eduardo Is a Single Taxpayer with a Farming Operation That

question 29

Essay

Eduardo is a single taxpayer with a farming operation that suffered a net loss of $30,000 in 2013.In addition,he earned $50,000 from his accounting firm.Eduardo purchased $150,000 of equipment for his farm.He wants to maximize his cost recovery deduction and believes the Section 179 election will help achieve that goal.However,he will elect out of bonus depreciation.What is the amount of the maximum Section 179 deduction Eduardo can use? Explain the optimum approach to attain his goal.Assume Eduardo's total taxable business income in 2014 will be $60,000,and he plans to add about $20,000 of equipment to the farm operation.

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Definitions:

Hydrophobicity

The physical property of a molecule that is seemingly repelled from a mass of water.

Cohesion

The force that holds molecules of the same substance together, contributing to the tensile strength of water.

Acid

Substance that releases hydrogen ions in water.

Base

Substance that accepts hydrogen ions in water.