Problem:

In July 2012, Tish acquires and places in service a business machine costing $159,000 with a 7 year MACRS recovery period. Tish elects the maximum allowable Sec. 179 expense on the machine but elects out of the bonus depreciation. In Agust 2012, she also places in service, business equipment costing $431,000, with a 5 year MACRS recovery period. Tish's taxable income (before the Sec 179 expense and the 50% of SE tax deduction) is $69,000.

Required:

Question 1: What is Tish's allowable 2012 Sec 179 expense on the machine? What amount can she carry over to 2013?

Question 2: What is Tish's total 2012 depreciation deduction?

Question 3: What are the limitations to Tish's ability to use the Sec 179 carryover in 2013?

Question 4: How would your answer to Part a change if Tish's business taxable income (before the Sec 179 expense and 50% of SE tax deduction) were $145,000 in 2012 instead of $69,000?

Note: Please provide step by step solution.