Part 2 Depreciation, Basis and Dispositions question: deduction before the business income limit

Part 2Depreciation, Basis and Dispositions

In 2025 a calendar-year business placed in service $4,150,000 of machinery qualifying for section 179, its only section 179 property. What is its maximum section 179 deduction before the business income limit?

A $0
B $120,000
C $2,350,000
D $2,500,000

Show the answer and explanation

Answer: C. $2,350,000

For 2025 the $2,500,000 limit is reduced dollar for dollar by section 179 property placed in service over $4,000,000: $4,150,000 - $4,000,000 = $150,000, leaving $2,350,000. The rest of the cost can be depreciated, including 100% bonus if acquired after January 19, 2025. Source: IRC 179(b)(1)-(2) as amended by P.L. 119-21; Pub. 946 (2025), Dollar Limits. Tax year: 2025 (law as of 31 Dec 2025).

Common mistake

Applying the 2024 limits after the One Big Beautiful Bill Act increase.

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Part 2 Depreciation, Basis and Dispositions question: deduction before the business income limit

Answer: C. $2,350,000

Common mistake

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Part 2 Depreciation, Basis and Dispositions question: deduction before the business income limit

Answer: C. $2,350,000

Common mistake

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