Election to Expense Assets (LO. 5) Jennifer owns a 40 percent interest in the Thomas Partnership. She also owns and operates an architectural consulting business. During the current year, the partnership purchases $1,536,000 worth of property qualifying under Section 179 and elects to expense $1,040,000. Jennifer purchases $625,200 worth of qualifying Section 179 property for use in her architectural consulting business. Assume that the asset is 7-year class property. Refer to the MACRS Depreciation Table to answer the following question. Complete the letter to Jennifer explaining what she should do to maximize her cost recovery. Note: Round all values to the nearest whole dollar. Dear Jennifer, Per your request, I am writing to clarify your tax question regarding maximizing your qualifying Section 179 property deduction. In general, each partner is allocated his/her proportionate share of the $1,040,000 expense election. Each partner is then subject to the $1,040,000 limit on his or her personal return. Consequently, you will be allocated $ 416,000 of the deduction. This will leave you with an additional Section 179 election to expense of $ 624,000 Your qualifying property purchases are $ 625,200 Bottom line, your Section 179 expense is $ 624,000 X . In addition, the basis of the purchased property, $ 1,200 is eligible for first-year depreciation (assuming the property is 7-year MACRS) of $ This will maximize your cost recovery of $ Feedback Check My Work There is a basis adjustment when Section 179 expense election is taken