1a In August 2020, Connie acquired, and placed into service, a business asset costing $2,650,000. The asset is classified as 5-year property. No other acquisitions are made during the year. Calculate Connies total deduction for depreciation, assuming she does not elect bonus depreciation but elects to take the Sec. 179 deduction. Assume she has ample taxable income in 2020.

Particular Amount

Value of asset 2,650,000

Limit as per sec 179 2,590,000

Max deduction as per sec 179 1,040,000

Excess expenditure made 60,000

Allowable deduction 980,000

b . Assume that Connies business net income from question 1a was only $750,000 in 2020, and that she elects to depreciate the excess Sec. 179 expense using MACRS instead of carrying it forward. What is Connies total deduction for depreciation in 2020?

c. Refer to problem number 1b again. What is the gain or loss if Connie sold the asset on April 18, 2021 for $1,350,000?