Brad is a shareholder and full-time employee of an S corporation. During 2010, he earns a $50,000 salary from the S corporation and is allocated $12,000 as his share of its net operating loss. In addition, Brad owns a limited partnership interest from which he earns $12,000 during 2010. Kanika, Brad's wife, operates a small business as a sole proprietorship. During 2010, she spends $65,000 on equipment for use in her business, which has a taxable income of $17,000 before the Section 179 deduction.
a. What is Brad and Kanika's maximum Section 179 deduction for 2010?
b. Assume that Brad is allocated $12,000 in Section 179 expense from the S corpora- tion for 2011 and Kanika spends an additional $14,000 on equipment for use in her business. Also, assume that their taxable active business income is $35,000 for 2011. What is Brad and Kanika's maximum Section 179 deduction for 2011?