H-Mart Section 179 Depreciation: Maximum Deduction Calculation
What is the maximum Section 179 depreciation that H-Mart can take?
The maximum Section 179 depreciation that H-Mart can take is $1,050,000. Section 179 allows businesses to deduct the cost of certain depreciable assets in the year they are placed in service, rather than depreciating them over several years. In this case, H-Mart purchased $800,000 worth of depreciable assets eligible for Section 179.
Calculation of Maximum Section 179 Depreciation for H-Mart
Step 2: Calculate the taxable income before Section 179 depreciation. In this case, H-Mart reported net income before Section 179 depreciation of $275,000.
Step 3: Subtract the taxable income from the maximum Section 179 amount.
$1,050,000 - $275,000 = $775,000
Therefore, H-Mart can take a Section 179 depreciation of up to $775,000. Since the company purchased $800,000 worth of depreciable assets, they can claim the full $800,000 as Section 179 depreciation, which is below the maximum limit. In summary, H-Mart can take a Section 179 depreciation of $800,000, which is the total amount of depreciable assets they purchased.