Comprehensive Problem 10-76 (LO 10-1, LO 10-2, LO 10-3, LO 10-4, LO 10-5) (Static) [The following information applies to the questions displayed below] Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2020. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2020 Date Placed in Asset Office furniture Cost Service Machinery Used delivery truck $ 150,000 1,560,000 40,000 02/03/2020 07/22/2020 08/17/2020 "Not considered a luxury automobile. During 2020, Karane was very successful (and had no 179 limitations) and decided to acquire more assets in 2021 to increase its production capacity. These are the assets acquired during 2021 Asset Computers and information system Luxury autof Assembly equipment Storage building Cost $ 400,000 80,000 1,200,000 700,000 Date Placed in Service 03/31/2021 05/26/2021 08/15/2021 11/13/2821 Used 100% for business purposes. Karane generated taxable income in 2021 of $1,732,500 for purposes of computing the 5179 expense limitation (Use MACRS Table 1. Table 2. Table 3. Table 4. Table 5, and Exhibit 10-10.) (Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.) EXHIBIT 10-10 Automobile Depreciation Limits Year Placed in Service Recovery Year 2021* 2020 2019 2018 1 10,100** 10,100** 10,100** 10,000** 2 3 16,100 16,100 16,100 16,000 9,700 4 and after 5,760 9,700 5,760 9,700 9,600 5,760 5,760 *As of press date, the IRS had not released the 2021 limitations for automobiles, so throughout the chapter we use the same limitation **$8,000 additional depreciation is allowed when bonus depreciation is claimed [168(k)(2)(F)]. Table 1 MACKS Na 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 6.931 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 Year 11 Year 12 Year 13 6.55 5.90 4.461 3.28 5.91 4.462 5.90 4.461 5.91 4.462 5.00 4461 Required: b. Compute the maximum 2021 depreciation deductions, including 5179 expense (ignoring bonus depreciation). Answer is complete but not entirely correct. Description Cost Section 179 Expense MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction 2020 Assets Office furniture $ 150,000 $ 00 $ 150,000 S 36,735 $ 36,735 Machinery Used delivery truck 1,560,000 40,000 00 00 0 0 0 40,000 12,800 12,800 2021 Assets Computers and Information 400,000 00 400,000 80,000 80,000 System Luxury Auto 80,000 100 80,000 0 0 Assembly Equipment 1,200,000 104,000 160,000 22,864 Storage Building 700,000 700,000 2,247 126,864 2,247 Total $ 4,130,000 $ 104,000 $ 1,530,000 $ 154,646 $ 258,646 www