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Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2017. In the process of setting up the business, Karane has acquired

Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2017. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2017:

AssetCostDate Placed in Service
Office furniture$150,00002/03/2017
Machinery1,560,00007/22/2017
Used delivery truck*40,00008/17/2017

*Not considered a luxury automobile.

During 2017, Karane was very successful (and had no §179 limitations) and decided to acquire more assets this next year to increase its production capacity. These are the assets acquired during 2018:

AssetCostDate Placed in Service
Computers & info. system$400,00003/31/2018
Luxury auto†80,00005/26/2018
Assembly equipment1,200,00008/15/2018
Storage building700,00011/13/2018

†Used 100% for business purposes.

Karane generated taxable income in 2018 of $1,732,500 for purposes of computing the §179 expense. (Use MACRS Table 1, Table 2, Table 3, Table 4, Table 5, and Exhibit 10-10.) Assume the 2017 §179 limits are the same as those in 2018. (Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.)

rev: 09_14_2018_QC_CS-135704

a. Compute the maximum 2017 depreciation deductions including §179 expense (ignoring bonus depreciation).

Current Total Description Cost S179 Expense MACRS Basis MACRS Depreciation Deduction Depreciation Office furniture150,000 Machinery Delivery truck Totals 150,000 560,000 40,000 0) 1,000,000 0) 1,560,000 40,000 1,000,000 $ 1,750,000 $ 1,000,000$ 750,000$ 0 

Current MACRS Total Depreciation Deduction Description Cost $179 Expense MACRS Basis Depreciation Office furniture 2$ 150,000 $ $ 150,000 $ Machinery 1,560,000 1,000,000 560,000 1,000,000 Delivery truck 40,000 40,000 Totals $ 1,750,000 $ 1,000,000 $ 750,000 $

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