Problem: Lori, who is single, purchased a new copier (five-year class property) for $30,000 and new furniture (seven-year class property) for $112,000 on May 20, 2005. Lori expects the taxable income derived from her business (without regard to the amount expensed under § 179) to be about $200,000. Lori wants to elect immediate § 179 expensing, but she doesn’t know which asset she should expense under § 179.
a. Determine Lori’s total deduction if the § 179 expense is first taken with respect to the copier.
b. Determine Lori’s total deduction if the § 179 expense is first taken with respect to the furniture.
c. What is your advice to Lori?