Back in Boston, Steve has been busy creating and managing his new company, Teton Mountaineering (TM), which is based out of a small town in Wyoming. In the process of doing so, TM has acquired various types of assets. Below is a list of assets acquired during 2013:

Asset

Cost

Date Placed in Service

Office furniture

$

10,000

02/03/2013

Machinery

560,000

07/22/2013

Used delivery truck*

15,000

08/17/2013

* Not considered a luxury automobile, thus not subject to the luxury automobile limitations.

During 2013, TM had huge success (and had no 179 limitations) and Steve acquired more assets the next year to increase its production capacity. These are the assets acquired during 2014:

Asset	Cost		Date Placed in Service
Computers & info. system	$	40,000	03/31/2014
Luxury auto		80,000	05/26/2014
Assembly equipment		475,000	08/15/2014
Storage building		400,000	11/13/2014

Used 100% for business purposes. Use 2013 limitations for 2014.

TM generated a taxable income in 2014 before any 179 expense of $732,500.

a.	Compute maximum 2013 depreciation deductions including 179 expense (ignoring bonus depreciation).

2013 depreciation deductions? $

Compute maximum 2014 depreciation deductions including 179 expense (ignoring bonus depreciation). 2014 depreciation deductions? $

c.	Compute maximum 2014 depreciation deductions including 179 expense, but now assume that Steve would like to take bonus depreciation on the 2014 assets. 2014 depreciation deductions? $

Ignoring part (c), now assume that during 2014, Steve decides to buy a competitors assets for a purchase price of $350,000. Compute maximum 2014 cost recovery including 179 expense (ignoring bonus depreciation). Steve purchased the following assets for the lump-sum purchase price.

Asset	Cost		Date Placed in Service
Inventory	$	20,000	09/15/2014
Office furniture		30,000	09/15/2014
Machinery		50,000	09/15/2014
Patent		98,000	09/15/2014
Goodwill		2,000	09/15/2014
Building		130,000	09/15/2014
Land		20,000	09/15/2014

2014 cost rea. $ Date Place in Service 29,750 9/15/2011 45,750 9/15/2011 61,500 9/15/2011 123,500 9/15/2011 3,000 9/15/2011 198,000 9/15/2011 27,500 9/15/2011 $ 2010

Thank you for your help. All the best