Question
Assume that Timberline Corporation has 2018 taxable income of $278,000 for purposes of computing the 179 expense. It acquired the following assets in 2018: (Use
Assume that Timberline Corporation has 2018 taxable income of $278,000 for purposes of computing the 179 expense. It acquired the following assets in 2018: (Use MACRS Table 1, Table 2, Table 3, Table 4and Table 5.)
| Asset | Purchase Date | Basis | |
| Furniture (7-year) | December 1 | $ | 488,000 |
| Computer equipment (5-year) | February 28 | 128,000 | |
| Copier (5-year) | July 15 | 68,000 | |
| Machinery (7-year) | May 22 | 518,000 | |
| Total | $ | 1,202,000 |
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a-1. What is the maximum amount of 179 expense Timberline may deduct for 2018?
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a-2. What is Timberlines 179 carryforward to 2019, if any?
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b. What would Timberlines maximum depreciation deduction be for 2018 assuming no bonus depreciation? (Round your intermediate calculations to the nearest whole dollar amount.)
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c. What would Timberlines maximum depreciation deduction be for 2018 if the machinery cost $3,380,000 instead of $518,000 and assuming no bonus depreciation? (Round your intermediate calculations to the nearest whole dollar amount.
Table 1 MACRS Half-Year Convention
| Depreciation Rate for Recovery Period | ||||||
|---|---|---|---|---|---|---|
| 3-Year | 5-Year | 7-Year | 10-Year | 15-Year | 20-Year | |
| Year 1 | 33.33% | 20.00% | 14.29% | 10.00% | 5.00% | 3.750% |
| Year 2 | 44.45 | 32.00 | 24.49 | 18.00 | 9.50 | 7.219 |
| Year 3 | 14.81 | 19.20 | 17.49 | 14.40 | 8.55 | 6.677 |
| Year 4 | 7.41 | 11.52 | 12.49 | 11.52 | 7.70 | 6.177 |
| Year 5 | 11.52 | 8.93 | 9.22 | 6.93 | 5.713 | |
| Year 6 | 5.76 | 8.92 | 7.37 | 6.23 | 5.285 | |
| Year 7 | 8.93 | 6.55 | 5.90 | 4.888 | ||
| Year 8 | 4.46 | 6.55 | 5.90 | 4.522 | ||
| Year 9 | 6.56 | 5.91 | 4.462 | |||
| Year 10 | 6.55 | 5.90 | 4.461 | |||
TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter
| Depreciation Rate for Recovery Period | ||
|---|---|---|
| 5-Year | 7-Year | |
| Year 1 | 35.00% | 25.00% |
| Year 2 | 26.00 | 21.43 |
| Year 3 | 15.60 | 15.31 |
| Year 4 | 11.01 | 10.93 |
| Year 5 | 11.01 | 8.75 |
| Year 6 | 1.38 | 8.74 |
| Year 7 | 8.75 | |
| Year 8 | 1.09 | |
TABLE 2b MACRS Mid-Quarter Convention: For property placed in service during the second quarter
| Depreciation Rate for Recovery Period | ||
|---|---|---|
| 5-Year | 7-Year | |
| Year 1 | 25.00% | 17.85% |
| Year 2 | 30.00 | 23.47 |
| Year 3 | 18.00 | 16.76 |
| Year 4 | 11.37 | 11.97 |
| Year 5 | 11.37 | 8.87 |
| Year 6 | 4.26 | 8.87 |
| Year 7 | 8.87 | |
| Year 8 | 3.34 | |
TABLE 2c MACRS Mid-Quarter Convention: For property placed in service during the third quarter
| Depreciation Rate for Recovery Period | ||
|---|---|---|
| 5-Year | 7-Year | |
| Year 1 | 15.00% | 10.71% |
| Year 2 | 34.00 | 25.51 |
| Year 3 | 20.40 | 18.22 |
| Year 4 | 12.24 | 13.02 |
| Year 5 | 11.30 | 9.30 |
| Year 6 | 7.06 | 8.85 |
| Year 7 | 8.86 | |
| Year 8 | 5.53 | |
TABLE 2d MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter
| Depreciation Rate for Recovery Period | ||
|---|---|---|
| 5-Year | 7-Year | |
| Year 1 | 5.00% | 3.57% |
| Year 2 | 38.00 | 27.55 |
| Year 3 | 22.80 | 19.68 |
| Year 4 | 13.68 | 14.06 |
| Year 5 | 10.94 | 10.04 |
| Year 6 | 9.58 | 8.73 |
| Year 7 | 8.73 | |
| Year 8 | 7.64 | |
TABLE 3 Residential Rental Property Mid-Month Convention Straight Line27.5 Years
| Month Property Placed in Service | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
| Year 1 | 3.485% | 3.182% | 2.879% | 2.576% | 2.273% | 1.970% | 1.667% | 1.364% | 1.061% | 0.758% | 0.455% | 0.152% |
| Year 2-9 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 |
| Year 10 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 |
| Year 11 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 |
| Year 12 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 |
| Year 13 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 |
| Year 14 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 |
TABLE 4 Nonresidential Real Property Mid-Month Convention Straight Line31.5 Years (for assets placed in service before May 13, 1993)
| Month Property Placed in Service | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
| Year 1 | 3.042% | 2.778% | 2.513% | 2.249% | 1.984% | 1.720% | 1.455% | 1.190% | 0.926% | 0.661% | 0.397% | 0.132% |
| Year 2-7 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 |
| Year 8 | 3.175 | 3.174 | 3.175 | 3.174 | 3.175 | 3.174 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 |
| Year 9 | 3.174 | 3.175 | 3.174 | 3.175 | 3.174 | 3.175 | 3.174 | 3.175 | 3.174 | 3.175 | 3.174 | 3.175 |
| Year 10 | 3.175 | 3.174 | 3.175 | 3.174 | 3.175 | 3.174 | 3.175 | 3.174 | 3.175 | 3.174 | 3.175 | 3.174 |
| Year 11 | 3.174 | 3.175 | 3.174 | 3.175 | 3.174 | 3.175 | 3.174 | 3.175 | 3.174 | 3.175 | 3.174 | 3.175 |
TABLE 5 Nonresidential Real Property Mid-Month Convention Straight Line39 Years (for assets placed in service on or after May 13, 1993)
| Month Property Placed in Service | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
| Year 1 | 2.461% | 2.247% | 2.033% | 1.819% | 1.605% | 1.391% | 1.177% | 0.963% | 0.749% | 0.535% | 0.321% | 0.107% |
| Year 239 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 |
| Year 40 | 0.107 | 0.321 | 0.535 | 0.749 | 0.963 | 1.177 | 1.391 | 1.605 | 1.819 | 2.033 | 2.247 | 2.461 |
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