I:10-34 Straight-Line Depreciation. Bobbys marginal tax rate has been low for several years because his sole proprietorship
Question:
I:10-34 Straight-Line Depreciation. Bobby’s marginal tax rate has been low for several years because his sole proprietorship has had low profits. Therefore, he has not elected Sec. 179 expensing, elected out of bonus depreciation, and elected to use the alternative depreciation system for property acquisitions. Bobby acquires, holds, or sells the following assets in 2022:
Date Acquired Date Sold Original Cost Basis Selling Price Depreciation Method Recovery Period
(Years)
Equipment 6/1/22 — $40,000 — SL ADS 7 Light duty truck
(Business-use)
5/1/18 12/1/22 30,000 $ 8,000 SL ADS 5 Furniture 3/1/18 — 10,000 — SL ADS 7 Automobile 7/1/19 12/1/22 12,000 10,000 SL ADS 5 Assume the half-year convention applies for each year.
a. What is the depreciation deduction for each asset in 2022?
b. What amount of gain or loss does Bobby recognize on the properties sold in 2022?
Step by Step Answer:
Pearsons Federal Taxation Corporations Partnerships Estates And Trust 2023
ISBN: 9780137730391
36th Edition
Authors: KENNETH E. ANDERSON, DAVID S. HULSE, TIMOTHY J. RUPERT Richard J. Joseph LeAnn Luna