8-40 (LO. 2, 3, 9) On June 5, 2020, Javier Sanchez purchased and placed in service a new 7-year class asset costing $560,000 for use in his landscaping business, which he operates as a single member LLC (Sanchez Landscaping LLC). During 2020, his business generated a net income of $945,780 before any 179 immediate expense election. Rather than using bonus depreciation, Javier would like to use 179 to expense $200,000 of this asset and then use regular MACRS to cost recover the remaining cost. If required round your intermediate computations and final answers to the nearest dollar. Click here to access the depreciation table to use for this problem. a. Determine the cost recovery deductions (including first year additional depreciation) that Javier Sanchez can claim with respect to this asset in 2020 and 2021. Total cost recovery deduction in 2020: $ 251,444 Total cost recovery deduction in 2021: $ 88,164 b. Complete Javier's Form 4562 (page 1) for 2020. Note: For 2020, the maximum 179 is $1,040,000 and the threshold amount is $2,590,000. If an amount is zero, enter "0". Enter amounts as positive numbers. Form 4562 Department of the Treasury Internal Revenue Service (99) Name(s) shown on return Javier Sanchez Depreciation and Amortization (Including Information on Listed Property) Attach to your tax return. Go to www.irs.gov/Form4562 for instructions and the latest information. Business or activity to which this form relates Sanchez Landscaping, LLC Election To Expense Certain Property Under Section 179 OMB No. 1545-0172 2020 Attachment Sequence No. 179 Identifying number 123-45-6789 Part I Note: If you have any listed property, complete Part V before you complete Part I. 1 Maximum amount (see instructions) ..... 1 1,040,000 2 Total cost of section 179 property placed in service (see instructions)..... 2 560,000 3 Threshold cost of section 179 property before reduction in limitation (see instructions). 3 2,590,000 4 Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter -0- . . . 4 0 here Section B-Assets Placed in Service During 2020 Tax Year Using the General Depreciation System (b) Month and (a) Classification of year placed in property 19a 3-year property b 5-year property c 7-year property d 10-year property e 15-year property service (c) Basis for depreciation (business/investment use only-see (d) Recovery period (e) Convention (f) Method (g) Depreciation deduction instructions) 538,570 X 7 yrs. HY DDB 538,570 X f 20-year property g 25-year property h Residential rental property 25 yrs. S/L 27.5 yrs. MM S/L 27.5 yrs. MM S/L 39 yrs. MM S/L i Nonresidential real MM S/L property Section C-Assets Placed in Service During 2020 Tax Year Using the Alternative Depreciation System S/L 20a Class life 12 yrs. S/L b 12-year 30 yrs. MM S/L c 30-year 40 yrs. MM S/L d 40-year Part IV Summary (See instructions.) 21 Listed property. Enter amount from line 28.. 21 22 Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on the appropriate lines of your return. Partnerships and S corporations-see instructions . . . 22 538,570 X 23 For assets shown above and placed in service during the current year, enter the portion of the basis attributable to section 263A costs. . . For Paperwork Reduction Act Notice. see separate instructions. 23 Cat. No. 12906N Form 4562 (2020)