CPA Regulation Reg Quiz: Apply Section 179 And Bonus Depreciation

What this quiz covers

This quiz focuses on Apply Section 179 And Bonus Depreciation, giving you a quick way to practice the rules, question types, and explanations that matter most for CPA Regulation Reg.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

Question 1

1. Apply 60% bonus depreciation to the remaining $780,000 basis after Section 179, then apply regular MACRS to the remainder. (correct answer)
2. Apply 60% bonus depreciation to the full $2,000,000 cost, then reduce the bonus amount by the Section 179 election.
3. Apply bonus depreciation first, then apply Section 179 to the remaining basis.
4. No bonus depreciation is allowed because Section 179 was elected on the asset.

Explanation: This question evaluates the sequencing of Section 179 and bonus depreciation deductions under IRC Sections 179 and 168(k). The key facts include a $1,220,000 Section 179 election on$2,000,000 property in 2024, leaving $780,000 for 60% bonus. The correct answer applies bonus to remaining basis per IRC Section 168(k)(7), then MACRS. Choice B reverses order; choice C is incorrect as order is Section 179 first; choice D wrongly prohibits bonus. Deduct Section 179 first, then bonus on adjusted basis. This ordering maximizes expensing benefits.

Question 2

1. Apply 100% bonus depreciation to the remaining $420,000 basis after Section 179, then no regular MACRS remains. (correct answer)
2. Apply 100% bonus depreciation to the full $1,500,000 cost, then apply Section 179 to reduce taxable income further.
3. Apply Section 179 only after bonus depreciation because bonus depreciation is computed first.
4. No bonus depreciation is allowed because Section 179 was elected at the maximum amount.

Explanation: This question evaluates bonus depreciation application post-Section 179 under IRC Section 168(k). The key facts include $1,080,000 Section 179 on$1,500,000 property in 2022, leaving $420,000 for 100% bonus. The correct answer applies 100% bonus to remainder per IRC Section 168(k). Choice B reverses; choice C orders incorrectly; choice D prohibits wrongly. Apply bonus after Section 179. This sequence enhances recovery.

Question 3

1. $200,000 is deductible in 2024 because total purchases are below the$3,050,000 phase-out threshold.
2. $100,000 is deductible in 2024;$100,000 carries over to future years. (correct answer)
3. $0 is deductible in 2024 because the election exceeds taxable income; the entire election is lost.
4. $120,000 is deductible in 2024 because bonus depreciation is 60% and increases the Section 179 ceiling.

Explanation: This question explores the income limitation's effect on elected Section 179 amounts under IRC Section 179(b)(3). The key facts include a $200,000 election on$500,000 property in 2024, with $100,000 income. The correct answer allows$100,000 with $100,000 carryover per IRC Section 179(b)(3)(B). Choice A exceeds income; choice C loses deduction permanently; choice D misuses bonus. Limit to income, carry over excess. This promotes multi-year utilization.

Question 4

1. $880,000 (limit reduced by phase-out:$1,080,000 - ($2,900,000 -$2,700,000)). (correct answer)
2. $1,080,000 (full statutory limit because taxable income exceeds the limit).
3. $2,000,000 (limited to taxable income; no dollar cap applies).
4. $0 (fully phased out because purchases exceed the threshold).

Explanation: This question tests the phase-out mechanism of IRC Section 179 when qualifying property exceeds the threshold. The key facts include $2,900,000 of qualifying property in 2022, exceeding the$2,700,000 threshold by $200,000, with$2,000,000 taxable income. The correct answer adheres to IRC Section 179(b)(2), reducing the $1,080,000 limit by$200,000 to $880,000, which is supported by income under IRC Section 179(b)(3). Choice B is incorrect as phase-out applies per IRC Section 179(b)(2); choice C exceeds the adjusted limit; choice D is wrong because phase-out is partial, not full, until exceeding threshold plus limit. Compute phase-out as dollar-for-dollar reduction over threshold before income check. This approach accurately reflects statutory intent for larger investments.

Question 5

1. $1,160,000 (full statutory limit; no phase-out applies because taxable income is high).
2. $1,100,000 (reduced by phase-out:$1,160,000 - ($2,950,000 -$2,890,000)). (correct answer)
3. $0 (fully phased out because purchases exceed$2,890,000).
4. $1,475,000 (limited to 50% of cost due to 2023 bonus depreciation rules).

Explanation: This question tests phase-out for property slightly over threshold under IRC Section 179(b)(2). The key facts are $2,950,000 property in 2023, exceeding by$60,000, with sufficient income. The correct answer reduces to $1,100,000 per IRC Section 179(b)(2). Choice A ignores phase-out; choice C fully phases out prematurely; choice D misapplies bonus. Reduce dollar-for-dollar over threshold. This ensures accurate limit adjustment.

Question 6

1. $700,000 (full election allowed because total purchases are below the phase-out threshold).
2. $600,000 (limited to taxable income;$100,000 carries over). (correct answer)
3. $800,000 (limited to asset cost; income limitation does not apply to S corporations).
4. $420,000 (60% bonus depreciation replaces the Section 179 deduction).

Explanation: This question tests the interaction of elected Section 179 amounts with the taxable income limitation under IRC Section 179(b)(3). The key facts are a $700,000 election on$800,000 property in 2024, with $600,000 income, no phase-out. The correct answer limits to$600,000 with $100,000 carryover, aligning with IRC Section 179(b)(3). Choice A exceeds income; choice C exceeds election and cost; choice D confuses with bonus under IRC Section 168(k). Limit deduction to income, carrying forward excess. This framework ensures deductions match economic reality.

Question 7

1. $500,000 is deductible in 2023 because the statutory limit exceeds$500,000.
2. $200,000 is deductible in 2023;$300,000 carries over to future years. (correct answer)
3. $0 is deductible in 2023 because taxable income is below the election; the full$500,000 is disallowed permanently.
4. $460,000 is deductible in 2023 because bonus depreciation is 80% and overrides the income limitation.

Explanation: This question probes the income limitation and carryover for Section 179 elections exceeding taxable income under IRC Section 179(b)(3). The key facts include a $500,000 election on$900,000 property in 2023, with $200,000 income, no phase-out. The correct answer allows$200,000 deduction with $300,000 carryover, per IRC Section 179(b)(3)(B). Choice A ignores income limit; choice C is wrong as excess carries over, not lost; choice D misintegrates bonus depreciation under IRC Section 168(k). Apply income limit to election, carrying over excess indefinitely. This rule supports tax planning in low-income years.

Question 8

1. $0 (fully phased out because purchases exceed$4,270,000). (correct answer)
2. $1,220,000 (full limit; phase-out does not apply to corporations).
3. $(1,220,000 - (4,500,000 - 3,050,000)) = -$230,000, so $0.
4. $1,000,000 (limited to 2024 taxable income cap for Section 179).

Explanation: This question examines the complete phase-out of Section 179 when property costs exceed the threshold plus limit under IRC Section 179(b)(2). The key facts are $4,500,000 qualifying property in 2024, exceeding the$3,050,000 threshold by $1,450,000, fully phasing out the$1,220,000 limit. The correct answer is $0, as the phase-out reduces the deduction to zero when costs exceed$4,270,000, per IRC Section 179(b)(2). Choice B is incorrect as phase-out applies to corporations; choice C calculates correctly but states negatively; choice D confuses with income cap, but phase-out prevails. Confirm if costs exceed threshold plus limit for full phase-out. This framework guides when to rely on bonus depreciation instead.

Question 9

1. $1,220,000 (full limit; purchases only slightly exceed the threshold).
2. $1,170,000 (limit reduced by$50,000: $1,220,000 - ($3,100,000 - $3,050,000)). (correct answer)
3. $0 (fully phased out because purchases exceeded the threshold).
4. $60,000 (60% bonus depreciation limits Section 179 to 60% of cost).

Explanation: This question examines partial phase-out of Section 179 when property slightly exceeds the threshold under IRC Section 179(b)(2). The key facts are $3,100,000 property in 2024, exceeding threshold by$50,000, with sufficient income. The correct answer reduces to $1,170,000 per IRC Section 179(b)(2). Choice A ignores phase-out; choice C overstates to full phase-out; choice D misapplies bonus. Reduce limit dollar-for-dollar over threshold. This calculation aids precise planning.

Question 10

1. $700,000 is deductible in 2024 because bonus depreciation can be used to increase the taxable income limitation.
2. $400,000 is deductible in 2024;$300,000 carries over to future years. (correct answer)
3. $1,220,000 is deductible in 2024 because the statutory limit exceeds the election.
4. $0 is deductible in 2024 because Section 179 is not allowed when bonus depreciation is available.

Explanation: This question probes income limitation with elected amounts exceeding income under IRC Section 179(b)(3). The key facts include $700,000 election on$1,000,000 property in 2024, with $400,000 income. The correct answer allows$400,000 with $300,000 carryover per IRC Section 179(b)(3)(B). Choice A misuses bonus; choice C exceeds income; choice D denies when bonus available. Limit to income, carry over. This supports deferred benefits.

Question 11

1. $850,000 (reduced by phase-out:$1,160,000 - ($3,200,000 -$2,890,000)). (correct answer)
2. $1,160,000 (full limit because taxable income exceeds the limit).
3. $0 (fully phased out because purchases exceed$4,050,000).
4. $310,000 (limited to the amount purchases exceed the threshold).

Explanation: This question tests phase-out calculation for exceeding threshold under IRC Section 179(b)(2). The key facts are $3,200,000 property in 2023, exceeding by$310,000, with sufficient income. The correct answer reduces to $850,000 per IRC Section 179(b)(2). Choice B ignores phase-out; choice C misstates full phase-out; choice D inverts calculation. Apply dollar-for-dollar reduction. This prevents miscalculation risks.

Question 12

1. $1,220,000 (full limit because taxable income equals purchases).
2. $370,000 (reduced by phase-out:$1,220,000 - ($3,900,000 -$3,050,000)). (correct answer)
3. $0 (fully phased out because purchases exceed$3,050,000).
4. $732,000 (60% of the reduced Section 179 limit due to 2024 bonus depreciation).

Explanation: This question tests the application of IRC Section 179, which allows businesses to expense the cost of qualifying depreciable property up to a specified limit, subject to phase-out and taxable income limitations. The key facts are that Ridgeway placed $3,900,000 of qualifying property in service, exceeding the$3,050,000 phase-out threshold, with taxable income of $3,900,000 before Section 179, and the 2024 maximum deduction limit is$1,220,000. The correct answer, $370,000, aligns with IRC Section 179(b)(2) because the deduction is reduced dollar-for-dollar by the amount of qualifying property exceeding$3,050,000, resulting in a phase-out of $850,000 and a reduced limit of$370,000, which does not exceed taxable income under Section 179(b)(3). Choice A is incorrect as it ignores the phase-out requirement in Section 179(b)(2) and incorrectly assumes the full limit applies solely due to matching taxable income and purchases. Choice C is wrong because the phase-out is not complete until the excess reaches $1,220,000 under Section 179(b)(2), and Choice D erroneously incorporates 2024 bonus depreciation rates from Section 168(k), which are irrelevant to the Section 179 calculation. Professionals should always first compute the phase-out reduction before applying the taxable income limitation when evaluating Section 179 eligibility. This ensures compliance with statutory limits and maximizes allowable deductions without overstatement.

Question 13

1. Apply bonus depreciation to the remaining basis after Section 179, then compute regular MACRS on the remainder. (correct answer)
2. Apply bonus depreciation first to 60% of cost, then apply Section 179 to the remaining 40%.
3. Apply bonus depreciation only if Section 179 is not elected on any property in the year.
4. Apply bonus depreciation to the full cost and ignore the Section 179 election because bonus is mandatory.

Explanation: This question addresses proper ordering of Section 179 and bonus depreciation under IRC Sections 179 and 168(k). The key facts include maximum Section 179 on $1,400,000 property in 2024, then 60% bonus on remainder. The correct answer applies bonus after Section 179 per IRC Section 168(k), then MACRS. Choice B reverses; choice C conditions incorrectly; choice D deems bonus mandatory. Sequence Section 179 before bonus. This maximizes immediate recovery.

Question 14

1. $1,080,000 (full statutory limit; purchases do not exceed the phase-out threshold and taxable income is sufficient).
2. $900,000 (limited to taxable income from the active conduct of the business). (correct answer)
3. $1,030,000 (reduced by phase-out:$1,080,000 - ($2,700,000 -$2,650,000)).
4. $0 (Section 179 not allowed because purchases are close to the phase-out threshold).

Explanation: This question evaluates income limitation when property is below phase-out threshold under IRC Section 179(b). The key facts are $2,650,000 property in 2022, no phase-out, with$900,000 income below limit. The correct answer limits to $900,000 per IRC Section 179(b)(3). Choice A exceeds income; choice C applies nonexistent phase-out; choice D misjudges threshold. Check income after confirming no phase-out. This prevents over-deduction errors.

Question 15

1. Apply 60% bonus depreciation to the remaining $400,000 basis (after Section 179), before regular MACRS. (correct answer)
2. Apply 60% bonus depreciation to the full $900,000 cost, then apply Section 179 to any remaining basis.
3. No bonus depreciation is allowed because a Section 179 election was made on the same asset.
4. Apply 60% bonus depreciation only to the Section 179 amount ($500,000) because it is expensed first.

Explanation: This question addresses the ordering rules for applying Section 179 and bonus depreciation under IRC Sections 179 and 168(k). The key facts involve a $500,000 Section 179 election on$900,000 qualifying property, leaving $400,000 basis for 60% bonus depreciation in 2024. The correct answer complies with IRC Section 168(k)(7), applying bonus to the adjusted basis after Section 179, followed by regular MACRS. Choice B is incorrect as bonus applies after, not before, Section 179 per Treas. Reg. 1.168(k)-1; choice C is wrong because both can be claimed on the same asset under IRC Section 168(k); choice D misstates the ordering, as bonus applies to remaining basis, not just the Section 179 amount. A professional framework is to deduct Section 179 first, then bonus, then MACRS on the remainder. This maximizes immediate expensing while adhering to statutory sequences.

Question 16

1. $0 (Section 179 fully phased out because purchases exceed the threshold).
2. $900,000 (limited to taxable income from the active conduct of the business). (correct answer)
3. $1,220,000 (maximum 2024 Section 179 limit; no income limitation applies).
4. $1,020,000 (maximum reduced by phase-out:$1,220,000 - ($3,200,000 -$3,050,000)).

Explanation: This question tests the application of IRC Section 179 deduction limits, including the dollar limitation, phase-out threshold, and taxable income limitation. The key facts are the $3,200,000 of qualifying property placed in service in 2024, exceeding the$3,050,000 phase-out threshold by $150,000, reducing the maximum deduction to$1,070,000 before considering the $900,000 taxable income from the active conduct of the business. The correct answer aligns with IRC Section 179(b)(3), which limits the deduction to taxable income from the trade or business, resulting in a$900,000 allowable deduction. Choice A is incorrect because the phase-out reduces the limit to $1,070,000, not to zero, per IRC Section 179(b)(2); choice C is wrong as the income limitation does apply under IRC Section 179(b)(3); choice D ignores the income limitation and only applies the phase-out under IRC Section 179(b)(2). Professionals should first compute the phase-out adjusted limit, then apply the lesser of that amount, the cost of qualifying property, or taxable income. Always verify taxable income excludes the Section 179 deduction itself but includes other business income.

Question 17

1. Only $300,000 is deductible in 2024;$300,000 carries over to 2025 subject to limitation. (correct answer)
2. The full $600,000 is deductible in 2024 because bonus depreciation can increase the taxable income limitation.
3. None of the $600,000 is deductible in 2024 because Section 179 is disallowed when taxable income is below the election.
4. Only $450,000 is deductible in 2024 because the Section 179 phase-out begins at$3,050,000 of purchases.

Explanation: This question tests the taxable income limitation under IRC Section 179 and its carryover provision for excess elections. The key facts are the $600,000 elected deduction against$300,000 of taxable income, with qualifying purchases of $1,000,000 below the 2024 phase-out threshold. The correct answer aligns with IRC Section 179(b)(3), allowing only$300,000 in 2024 with a $300,000 carryover to future years when income may permit deduction. Choice B is incorrect as bonus depreciation does not increase the income limitation for Section 179 per IRC Section 179(b)(3); choice C is wrong because excess over income carries over, not disallowed, under IRC Section 179(b)(3)(B); choice D misapplies the phase-out threshold from IRC Section 179(b)(2). Practitioners should evaluate income limitations after elections to identify carryovers. This framework prevents permanent loss of deductions and optimizes multi-year tax planning.

Question 18

1. $1,220,000 (full 2024 limit; not reduced because purchases are below the$3,050,000 threshold; limited to $1,000,000 by income).
2. $1,000,000 (limited to taxable income from the active conduct of the business). (correct answer)
3. $1,500,000 (limited to total qualifying purchases; income limitation does not apply to partnerships).
4. $1,220,000 (deductible in full because it is below taxable income when including bonus depreciation).

Explanation: This question assesses the taxable income limitation for Section 179 in pass-through entities like partnerships under IRC Section 179(b)(3). The key facts are $1,500,000 total qualifying purchases in 2024, below the phase-out threshold, with$1,000,000 taxable income and election for maximum deduction. The correct answer limits the deduction to $1,000,000 per IRC Section 179(b)(3), as it is less than the$1,220,000 statutory limit and cost. Choice A misapplies the income limit; choice C is incorrect as income limitation applies to partnerships under IRC Section 179(d)(8); choice D wrongly includes bonus in income for Section 179 purposes. Evaluate Section 179 as the lesser of limit, cost, and income for eligibility. This decision rule optimizes deductions across entity types.

Question 19

1. $1,220,000 (full 2024 statutory limit; no phase-out applies).
2. $770,000 (2024 limit reduced by phase-out:$1,220,000 - ($3,500,000 -$3,050,000)). (correct answer)
3. $0 (Section 179 disallowed for C corporations).
4. $950,000 (limited to 2024 bonus depreciation percentage).

Explanation: This question examines the phase-out provision of IRC Section 179 for qualifying property purchases exceeding the annual threshold. The key facts include $3,500,000 of qualifying property in 2024, exceeding the$3,050,000 threshold by $450,000, with taxable income of$4,000,000 sufficient to support the deduction. The correct answer follows IRC Section 179(b)(2), reducing the $1,220,000 limit dollar-for-dollar by the excess, yielding$770,000, which is not further limited by income under IRC Section 179(b)(3). Choice A is incorrect as phase-out does apply per IRC Section 179(b)(2); choice C is wrong because Section 179 is available to C corporations under IRC Section 179(a); choice D confuses Section 179 with bonus depreciation under IRC Section 168(k). A decision rule is to calculate the phase-out first, then check against income and cost limits. This ensures compliance with statutory caps and avoids over-deduction.

Question 20

1. $1,160,000 (2023 statutory limit; not limited by taxable income).
2. $1,500,000 (limited to taxable income; excess election carries forward).
3. $1,160,000 (limited to the statutory limit, which is below taxable income). (correct answer)
4. $0 (Section 179 is not available for new property eligible for bonus depreciation).

Explanation: This question evaluates the statutory dollar limit and taxable income limitation for Section 179 deductions under IRC Section 179(b). The key facts are the $2,000,000 qualifying property cost in 2023, below the phase-out threshold, with$1,500,000 taxable income exceeding the $1,160,000 statutory limit. The correct answer follows IRC Section 179(b)(1), capping the deduction at the statutory limit of$1,160,000, as it is less than both cost and income. Choice A ignores the income limit but is moot here; choice B is incorrect as the deduction cannot exceed the statutory limit per IRC Section 179(b)(1); choice D is wrong because Section 179 is available alongside bonus depreciation under IRC Section 168(k). Always apply the minimum of statutory limit, cost, and income for Section 179 calculations. This rule ensures deductions do not exceed legislative constraints.