Cost 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 Service Office furniture $ 180,000 02/03/2020 Machinery 1,566,000 07/22/2020 Used delivery truck 46,000 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 Date Placed in Asset Cost Service Computers and information system $ 406,000 03/31/2021 Luxury autot 81,500 05/26/2021 Assembly equipment 1,230,000 88/15/2021 Storage building 700,000 11/13/2021 tused 100% for business purposes. Karane generated taxable income in 2021 of $1,740,000 for purposes of computing the $179 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.) tUsed 100% for business purposes. Karane generated taxable income in 2021 of $1,740,000 for purposes of computing the $179 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.) Required: a. Compute the maximum 2020 depreciation deductions, including 5179 expense (ignoring bonus depreciation). Current MACRS Depreciation Description Cost $179 Expense MACRS Basis Total Cost Recovery Deduction $ 0 0 0 Office furniture Machinery Used delivery truck Total 0 0 $ 0 $ 0 $ 0 $ 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 Years 1.09 TABLE 26 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 8 224 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 20 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 EXHIBIT 10-10 Automobile Depreciation Limits Recovery Year 1 2 3 4 and after 2021" 10.100** 16,100 9,700 5.760 Year Placed in Service 2020 2019 10,100** 10.100** 16,100 16,100 9,700 9,700 5,760 5,760 2018 10,000** 16,000 9.600 5,760 As of pruss date, the IRS had not released the 2027 limitation for automobiles, so throughout the chapter we use the same limitation as in 2020 for 2021. **$8,000 additional depreciation is allowed when bonus depreciation is claimed ($168(2)(?). Thes TABLE 5 Nonresidential Real Property Mad Math Creative Straight Live Years ders placed in May 13,1993) Meath Property Pared in Service Month Month 2 Month Month Months Muth Month Mosis Moth Year 1 2.46196 20339 1 8199 1 6099 170196 1 0.3611 07 Year 2-39 2.564 2564 2564 26 2564 2564 2.561 2566 2166 Year 40 0.107 0 121 0535 0.749 0.963 117 1601 Musta 053516 Musik 11 331 Meals 2013 23 Moth 11 1125 3175 3114 TABLE4 Nonresidential Real Property Mid Meath Convention Straight line 31.5 Years for its placed is vice before May 13, 1993 Mouth Month 2 Muth Property Maced in Service Month 3 Year 1 Maath4 Months Meath 6 3.012 2.778% Month 7 25135 Months Month Month 10 Math 11 2.249% Year 2-7 1984% 17206 3.175 145596 3.175 1909 3.175 0926% 0.60196 3175 0.19% 3175 3.175 Years 3.175 3.175 1.174 3.175 1.175 3175 3.125 1.175 3.174 3.175 3:17 3195 Year 9 3.125 3.174 3.175 1175 3.815 3.174 3175 3.174 1.125 Year 10 3.175 3175 3174 3.125 3.174 3.174 3.175 3174 3.175 3 174 3175 Year Il 1114 3.135 IN 3.174 3.175 3124 3.135 3.174 3.125 1.174 3175 3.174 3.175 3.174 Year 12 3.175 3.174 3.175 3.174 3.175 3.175 3.174 179 2174 1.175 Year 13 3.174 3.175 3.174 3175 1174 3.175 3174 3175 3.174 1.175 114 Year 14 3.175 3.174 3.175 3174 1175 3.174 3175 3.174 3.175 1174 3.175 Year 15 3 174 3.175 3.174 3175 3.174 3.175 1174 3.175 5.174 3175 1174 Year 16 3.175 3.174 3.175 3.174 3175 3.174 3.175 3176 3125 3174 3.125 Year 17 3.174 3.175 3.174 3175 3.174 3.175 3.174 3175 3.174 3175 3.174 Year 18 3.175 3.174 3.175 3.174 3 175 3.174 1175 3.174 1.175 3170 3.175 Year 19 3174 3.175 3.174 3.175 3.174 3175 3.174 3175 3.174 3 175 3174 Year 20 1.175 3.174 3125 3.174 1175 3174 3175 3.174 3175 3.174 3175 3.125 3.174 Year 21 3.175 3175 3.174 3.174 3174 3.174 5.175 1.174 3174 3.174 3.175 3.174 3.175 Year 22 3174 3.175 3.174 3.175 3175 3175 3175 3.175 3174 3.114 1.175 1.115 3174 3.174 3.175 Year 23 3 174 3.174 175 3174 3115 3174 3.174 3.175 3.175 Year 24 3.174 3.175 3.174 3.175 3194 3175 3174 3.175 1174 3.115 3.174 3.175 3.174 3.174 3.175 Year 25 79 Mostly doudy A 3.175 11 3.174 3.125 3.174 3.173 1114 3.175 3.174 1125 3175 3175 1175 3114 3175 1174 3115 3.174 3.125 3.174 3.175 3.175 3170 3.175 3.174 1125 Year 25 Year 26 Year 27 Year 28 Year 29 Year 30 Year 31 Year 32 Year 33 3 174 3.175 3.174 3.175 3.174 3.175 3.174 1720 3.175 3 174 3.175 3.174 3.175 3.174 3.175 1984 1125 114 1125 31 3.174 3.175 3174 3175 1174 3175 3.174 3.175 3174 3175 3.174 20249 3.174 1175 3.174 3.175 3174 3.175 2513 3.19 1175 3174 3.15 300 3.175 3.174 3.175 3 124 3.175 1174 1.175 3.174 3.175 0132 3:174 3.175 3174 3:175 312 3175 3174 3175 124 0.99 3.175 1174 1175 3174 3.175 311 3.175 3174 1.175 0661 3 174 3175 3.170 1195 1174 1125 3.114 3175 1114 0926 3170 3175 3134 3.115 112 117 174 12 311 3114 312 1 118 1190 2778 1453 3.632 3637 TABLE 3 Residential Rental Property Mid-Month Convention Straight line 27.5 Year Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 5 Year 1 Month 6 Month 7 3.485% 3.18296 2879% 2.576% 2.2739 1970% Year 2.9 16679 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 3637 3.636 Year 11 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 12 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 13 3.636 3636 3636 3.636 3.636 3.636 3637 Year 14 3.637 3.632 3.637 3.632 3,637 3.637 3.636 Year 15 3636 3.636 3.636 3.636 3.636 3.636 3.637 Year 16 3.637 3.637 3637 3.637 3.637 3637 3.636 Year 17 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 18 3.637 3.637 3.637 3637 3.637 3.637 3.636 3.636 3.636 Year 19 3.636 3.636 3637 3636 3636 3.637 Year 20 3.637 3.637 3.637 3.636 3.632 3.636 3.636 3636 3.636 3.637 3.636 3.636 Year 21 3.637 3.636 3637 3.637 3.637 3.637 3.637 Year 22 3.636 3636 3.637 3636 3.636 3.636 3.636 Year 23 3637 3.637 3.636 3.637 3.637 3.637 3.637 Year 24 3.636 3.636 3.636 3.636 Year 25 3.637 3636 3637 3637 3.637 3.637 Year 26 3.636 3636 3.636 Year 27 3.636 Meaths Month 9 Month 10 Month 11 Month 12 1.3619 1.061% 0.758% 0.455% 0152% 3.636 3.636 3.696 3616 361 3.636 3636 3.636 3636 3.636 3.637 3637 3.637 3631 3.637 3.636 3.636 1636 1636 3616 3.637 3617 3637 3.637 3617 3636 3.636 3636 1636 1646 3.637 3637 3617 3637 3636 3636 3.66 3636 3.636 3.637 3637 3.637 3.637 3.636 3636 3636 3616 3636 3631 3.637 3617 3.637 1637 3.636 3636 3.636 3636 3632 3.637 3637 3.63% 3617 3.636 3646 3636 3636 3.636 3.637 3637 3637 3636 3.636 3636 3637 3637 3.637 3637 3.636 3.636 3636 3636 3.636 3637 3637 3.637 3.637 3.636 3.637 3.637 3537 3636 3636 1.637 3.637 3636 3.636 3637 3637 3.637 3.636 74' Mostly doudy 3.636 1961 ASCO SSFO 1991 99 E STO 949 3636 CSCE 3.636 3.637 1636 1901 SEE LES E 99 E LE9 1616 3637 SSTE 99 618 969 9LSZ 9E9 E 3.63 26 9E9 3631 3.637 3.636 919 LES E ELZZ 999 LES E 9E9 E Year 29 Year 28 Year 27 Year 26 Year 25 989 f 2.9 3.646 3.637 99 LE9E 3.637 3.636 29 99 3.637 3.636 DI 1.637 289 LEIE 999 99 E Table 1 MACRS Half-Year Convention Depreciation Rate for Recovery Period 3-Year 5-Year 7-Year 10-Year 15-Year 20-Year 33.33% 20.00% 14.29% Year 1 Year 2 10.00% 5.00% 3.750% 44.45 24.49 18.00 7.219 32.00 19.20 Year 3 9.50 8.55 17.49 14.40 6.677 14.81 7.41 Year 4 12.49 11.52 7.70 6.177 11.52 11.52 Year 5 Year 6 8.93 9.22 6.93 5.713 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 6.55 5.90 4.461 Year 10 Year 11 Year 12 Year 13 3.28 5.91 4.462 5.90 4.461 5.91 Year 14 4.462 4.461 5.90 Year 15 4.462 Year 16 5.91 2.95 Year 17 4.461 4.462 Year 18 4.461 Year 19 Year 20 Year 21 4.462 4.461 2.231