Andy has operated his moving company , MoveOn, as a sole proprietorship for several years. In the current tax year, MoveOn placed into service$700,000 of real property improvements eligible for immediate expensing under $179(but not eligible for bonus sepreciation). Andy also joined with another local mover to form and operate a storage partnership, The Attic LLC. Andy holds a 90% capital and profits interest in the Attic.

This year, the Attic purchased and placed into service $2,900,000 of property eligible for expensing under 179(and not eligible for bonus depreciation). Andy has 800,000 of taxable income from MoveOn and a $750,000 share of ordinary income from his 90% ownership of The Attic, both before considering any 179 expense. Assuming that Andy his current deductions (without sacrificing future deductions), how much can he elect to deduct under 178? How are any remaining expenditures treated? Note: For simplification, disregard inflation adjustments that may be in effect, and simply use the information shown in the code.