Modifications Related To Bonus Depreciation & Section 179 Expensing Instructions (Page 31 of 40) in pdf

Modifications Related To Bonus Depreciation & Section 179 Expensing Instructions Page 31

Section 179 expense breakdown:

$20,000 3-year property (25%)

$60,000 5-year property (75%)

Dollar Limitation:

The aggregate cost of section 179 property that a taxpayer can elect to expense is $100,000.

Business Income Limitation:

Because the partnership’s business income is $100,000 and the aggregate cost of the section 179

property is $80,000, there is no business income limitation.

Carryforward:

There is no carryforward amount because there has been no limitation based on taxable income.

Partnership #2:

Member A’s share:

Business income

$100,000

x 90%

$90,000

Section 179 expense $ 80,000

$72,000

Distributable income $ 20,000

$18,000

Member A is a 90% owner of this partnership

Section 179 expense breakdown:

$50,000 5-year property (62.5%)

$30,000 7-year property (37.5%)

Limitations: same as for Partnership #1.

Member A:

Business income

50,000 + 90,000

$140,000

Section 179 expense

40,000 + 72,000 = 112,000 (limited to 100,000)

$100,000

Federal Adjusted Gross Income (“FAGI”)

$ 40,000

Dollar Limitation:

The aggregate cost of section 179 property that a taxpayer can elect to expense is $100,000.

Since Member A’s aggregate expense passed through from the partnerships exceeds $100,000,

the excess is disallowed for both federal and state purposes.

Maine return

Maine Limitation:

Dollar limitation:

Modifications Related To Bonus Depreciation & Section 179 Expensing Instructions Page 31