[jft]

Can someone please help me with this question.

Sally Markey, who owns a heavy construction company, decided to spend some of her $2,000,000 2014 profit on a heavy-duty diesel truck costing $811,000 for her business. In order to lower her income taxes for the year, she decided to take the maximum Section 179 deduction plus the MACRS depreciation for 7-year property. The ceiling for Section 179 in 2014 is $25,000. No other capital assets were purchased during 2014. What is the total deduction for the truck in 2014? Answer is $137,319

Explanation:Sally Markey took the largest Section 179 deduction available in 2014, $25,000. This reduced the truck tax basis to $786,000 ($811,000 – $25,000). Depreciation available for the first year of MACRS is $112,319 ($786,000 × 0.1429). Total expense is $137,319 for the year ($25,000 + $112,319).

I thought that the $25,000 deduction i phased out when the purchase cost exceeds $200,000? I’m confused.

[leglock]

I agree with you

[jgmart04]

*bump*

I agree with your logic jft. Have you submitted this to Jeff? This answers makes no sense to me and it looks like you're the only one that has asked the question.

[Mjganier]

I asked about it in the study group thread and the consensus was that the question is wrong. I also vaguely remember a thread where it was said Jeff knew about it and he also said it was wrong.

FAR 8/18/2014--87
AUD 10/18/2014--78
REG 11/24/2014--76
BEC 2/28/2015--76

"If you can't explain it simply, you don't understand it well enough"-Albert Einstein

Study Mats: Cpaexcel study text and EQ, Ninja MCQ, Ninja notes

[jeff]

It's an error that's either fixed or getting fixed in the MCQ.

AUD - 79
BEC - 80
FAR - 76
REG - 92

Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[jgmart04]

Thanks jeff.

[Mika]

Jeff, it appears that the error still not fixed in 2015 Ninja MCQ 🙂

Question no. 932

REG - 80 (02/13/2015) Roger + Ninja Flash Card + Ninja MCQ + Becker's Note
FAR - 84 (05/29/2015) Roger + Ninja MCQ + Some Wiley book questions
BEC - 77 (08/27/2015) Roger + Ninja MCQ + Half Wiley book questions
AUD - 87 (08/28/2015) Roger + Ninja MCQ + Half Wiley book questions

[jeff]

Argh – that was on my list to spot-check tonight…thank you

AUD - 79
BEC - 80
FAR - 76
REG - 92

Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[Mika]

Jeff, not sure if changes has been made for the below too

Ninja MCQ Question #1526 (REG)

Thank you so much for the hardwork~

REG - 80 (02/13/2015) Roger + Ninja Flash Card + Ninja MCQ + Becker's Note
FAR - 84 (05/29/2015) Roger + Ninja MCQ + Some Wiley book questions
BEC - 77 (08/27/2015) Roger + Ninja MCQ + Half Wiley book questions
AUD - 87 (08/28/2015) Roger + Ninja MCQ + Half Wiley book questions

[jeff]

Thank you – this one didn't make it to the database either…appreciate that.

AUD - 79
BEC - 80
FAR - 76
REG - 92

Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[Mika]

Jeff, is the below question included in your list to “spot-check” too?

Ninja Q. 920

On February 1, 2014, Pam Baker purchased an $861,000 machine (5-year property) for use in her business. Pam expensed $25,000 under Section 179 in addition to the regular depreciation of 20% in 2014 and 32% in 2015. Pam's total deductions for 2014 and 2015 for the machine are:

$192,200 (2014) and $267,520 (2015).

Pam's 2014 deduction is:

Section 179 $ 25,000

20% x ($861,000 – $25,000) 167,200

---

$192,200

Pam's 2015 deduction is:

32% x ($861,000 – $25,000) = $267,520

________________

Thank you 🙂

REG - 80 (02/13/2015) Roger + Ninja Flash Card + Ninja MCQ + Becker's Note
FAR - 84 (05/29/2015) Roger + Ninja MCQ + Some Wiley book questions
BEC - 77 (08/27/2015) Roger + Ninja MCQ + Half Wiley book questions
AUD - 87 (08/28/2015) Roger + Ninja MCQ + Half Wiley book questions

[MMQCPA]

this question gave my a major headache…till i googled it and found this – i was really questioning my sanity cause i know the 25,000 is phased out lolll

[Author]

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