Browne, a self-employed taxpayer, has 2018 business net income of $15,000 prior to any expense deduction for equipment purchases. In 2018, Browne purchases and places into service, for business use, office machinery costing $20,000. This is Browne's only 2018 capital expenditure. Browne makes a proper and timely expense election to deduct the maximum amount (ignoring bonus depreciation). Browne is not a member of any pass-through entity. What is Browne's deduction under the election

Question

Liam Orozco

Business

21 December, 22:16

Browne, a self-employed taxpayer, has 2018 business net income of $15,000 prior to any expense deduction for equipment purchases. In 2018, Browne purchases and places into service, for business use, office machinery costing $20,000. This is Browne's only 2018 capital expenditure. Browne makes a proper and timely expense election to deduct the maximum amount (ignoring bonus depreciation). Browne is not a member of any pass-through entity. What is Browne's deduction under the election

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Elisa Branch · Answer 1

Answer: $20,000

Explanation: A taxpayer who spends less than $800,000 on equipment can deduct the cost of

equipment purchases up to a maximum of $250,000 per tax year. The deduction is limited to the amount that will reduce taxable income to zero.