Silver Leaf, a retail bakery, traded two ovens with a total adjusted basis of $680 for a new oven costing $1,320. They received an $800 trade-in allowance for the old ovens and paid $520 in cash for the new oven. The bakery also traded a used van with an adjusted basis of $4,500 for a new van costing $9,000. They received a $4,800 trade-in allowance on the new van and paid $4,200 in cash for the new van.

What portion of the new properties' bases qualifies for the Section 179 deduction?

A. $0
B. $520
C. $4,200
D. $4,720

Only the additional cash paid for the new properties qualifies for the Section 179 deduction. For the retail bakery's new oven and new van, this total cash payment amounts to $4,720, making option D the correct answer.

Explanation:

The question primarily deals with Section 179 deduction and the calculation of the new property's basis when old properties are traded in part for new ones. For the ovens, the bakery received an $800 trade-in allowance and paid an additional $520 in cash. Since the allowed Section 179 deduction is oftentimes limited to the cash paid during the purchase or trade-in, only the $520 cash payment would qualify for the deduction regarding the ovens. Similarly, the bakery traded in the used van, valued at an adjusted basis of $4,500, for a new van costing $9,000. They received a $4,800 trade-in allowance and paid $4,200 in cash. Thus, for the vans, only the cash payment of $4,200 would potentially qualify for the Section 179 deduction.

Therefore, the total amount that qualifies for Section 179 deduction from the new properties' bases is $520 (for the oven) + $4,200 (for the van) = $4,720. In conclusion, the correct answer to the question is D. $4,720.