Question

Rambo Manufacturing Co. purchased $3,000,000 in new production equipment during June, of the current year. The maximum Section 179 deduction allowed if this is the only purchase during 2021 and Rambo Manufacturing had $10,000,000 of business income for the year is

Answer 1

The maximum Section 179 deduction allowed during 2021 is $1,050,000.

What is Section 179 deduction?

Section 179 is an IRS tax code which allows Rambo Manufacturing Co. and other businesses to deduct the full purchase price of qualifying equipment that Rambo Manufacturing Co. purchased or financed during 2021.  The implication is that Rambo can deduct $1,050,000 from its business income of $10,000,000.

Thus, the maximum Section 179 deduction allowed during 2021 is $1,050,000.

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