d. Now assume that during 2019, Karane decides to buy a competitors assets for a purchase price of $1,350,000. Compute the maximum 2019 cost recovery, including 179 expense and bonus depreciation. Karane purchased the following assets for the lump-sum purchase price. (Round your final answers to the nearest whole dollar amount.)

Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2018. In the proces of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2018: Asset Office furniture Machinery Used delivery truck* Cost $ 150,000 1,560,000 40,000 Date Placed in Service 02/03/2018 07/22/2018 08/17/2018 *Not considered a luxury automobile. During 2018, Karane was very successful and had no $179 limitations) and decided to acquire more assets in 2019 to increase its production capacity. These are the assets acquired during 2019: Asset Computers & info. system Luxury autot Assembly equipment Storage building Cost $ 400,000 80,000 1,200,000 700,000 Date Placed in Service 03/31/2019 05/26/2019 08/15/2019 11/13/2019 Used 100% for business purposes. Karane generated taxable income in 2019 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 2018 $179 limits are the same as those in 2019. (Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.) a. Compute the maximum 2018 depreciation deductions, including $179 expense (ignoring bonus depreciation). Description Cost $179 Expense MACRS Basis Current MACRS Depreciation Total Depreciation Office furniture Machinery Delivery truck Totals 0 $ 0 $ 0 $ b. Compute the maximum 2019 depreciation deductions, including $179 expense (ignoring bonus depreciation). Description Cost Sec. 179 Expense MACRS Basis Current MACRS Depreciation Total Depreciation Deduction 2018 Assets Office furniture Machinery Used delivery truck 2019 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building Totals $ 0 $ 0 $ 0 $ c. Compute the maximum 2019 depreciation deductions, including $179 expense, but now assume that Karane would like to take bonus depreciation. Description Cost Sec. 179 Expense Bonus MACRS Basis Current MACRS Depreciation Total Depreciation Deduction 2018 Assets Office furniture Machinery Used delivery truck 2019 Assets Computers & Info System Luxury Auto Assembly Equipment Storage Building Totals Asset Inventory Office furniture Machinery Patent Goodwill Building Land Cost $220,000 230,000 250,000 198,000 2,000 430,000 20,000 Date Placed in Service 09/15/2019 09/15/2019 09/15/2019 09/15/2019 09/15/2019 09/15/2019 09/15/2019 Description Cost Sec. 179 Expense Bonus MACRS Basis Current MACRS Depreciation Total Depreciation Deduction 2018 Assets Office furniture Machinery Used delivery truck 2019 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building 0 Inventory Office Furniture Machinery Patent Goodwill Building Land Totals EXHIBIT 10-10 Automobile Depreciation Limits Recovery Year 1 Recovery Year 2 Recovery Year 3 Recovery Year 4 and after 2019 10,000** 16,000 9,600 5,760 Year Placed in Service 2018 2017 10,000* 3,160* 16,000 5.100 9,600 3,050 5,760 1,875 2016 3,160* 5.100 3,050 1.875 *As of press date, the IRS had not released the 2019 limitations for automobiles, so throughout the chapter we use the same limitations as in 2018 for 2019. **$8,000 additional depreciation is allowed when bonus depreciation is claimed ($168(k) (2) (F)]. Table 1 MACRS Half-Year Convention Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Depreciation Rate for Recovery Period 3-Year 5-Year 7-Year 10-Year 15-Year 20-Year 33.33% 20.00% 14.29% 10.00% 5.00% 3.750% 4 4.45 32.00 24.49 18.00 9.50 7.219 14.81 19.20 17.49 14.40 8.55 6 .677 7.41 11.52 12.49 11.52 7.70 6.177 11.52 8.93 9.22 6.93 5.713 L 5.76 / 8.927.37 6.235.285 8.93 - 6.55 5.90 4.888 4.46 6.55 5.90 4.522 6.56 5.91 4.462 6.55 5.90 4.461 3.28 5.91 4.462 5.90 4.461 5.91 4.462 5.90 4.461 5.91 4.462 2.95 4.461 4.462 4.461 4.462 4.461 2.231 TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter 1 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 26 MACRS Mid-Quarter Convention: For property placed in service during the second quarter Depreciation Rate for Recovery Period 5-Year 7-Year 1 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 1 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 7 .64 8 TABLE 3 Residential Rental Property Mid-Month Convention Straight Line-27.5 Years Month Property Placed in Service | Month1 | Month2 | Month 3 | Month 4 | Month 5 | Month 6 ] Month 7] Month 8] Month 9 | Month 10 | Month Il Month 12 | Yearl 3.485% 3.182% 2.879% 2.576%| 2.273% _1.970% | 1.667% _1.364%| 1.061% 0.758%| 0.455% | 0.152% Year2- 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 Year10 | 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 Yearll 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3 .637 3.637 3.637 Year123.6373.6373.6373.637 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 Year14 3.637 3.637 3 .637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 Year15 3.636 3.636 3.636 3.636 3.636 ] 3.636 ] 3.637 3.637 3.637 3 .637 3.637 3.637 Yearl63.6373.6373.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 Year17 | 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 [ 3.637 [ Year18 | 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 Year193.636 3.636 3.636 3.636 3.636 ] 3.636 ] 3.637 3.637 3.637 3 .637 3.637 3.637 Year 20 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 21 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 22 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 23 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 24 3.6373.6373.6373.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 Year 25 | 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 26 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 27 3.636 3.636 3.636 3.636 3.6363.6363.6373.6373.6373.6373.6373.637 Year 28 | 1.97 2.273 2.576 2.879 3.182 3.485 3.636 3.636 3.636 3.636 3.636 3.636 Year 29 0.152 0.455 0.758 1 .061 1.364 1.667 | | | | | | | | | | | | | | | Month 12 0.132% 3.175 3.175 | 3.174 3.175 3.174 3.175 3.174 3.175 174 3.175 3.174 3.175 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 1 Month 3 Month 9 Year 1 3.042% 2.778% 2.513% 2.249% 1.984% 1.720% 1.455% 1.190% 0.926% Year 2-7 3.175 L 3.175 3.175 3.175 3.175 3.175 3.175 3.175 L 3.175 Year S 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.175 Year 9 3.174 3.175 3.174 3.175 3.174 3.175 L 3.174 3.175 3.174 Year 10L 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 11 3.174 3.175 3.174 3.175 L 3.174 3.175 3.174 3.175 3.174 Year 12 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 13 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.174 Year 14 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 15 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 16 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 17 3.174 3.175 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.175 L 3.174 Year 18 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 19 3.174 3.175 3.174 3.175 L 3.174 3.175 3.174 3.175 3.174 Year 20 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 21 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 22 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 23 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.115 3.174 Year 24 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 25 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.174 Year 26 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 27 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 28 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 | 3.175 Year 29 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.174 Year 30 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 31 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 32 1.720 1.984 2.249 2.513 2.778 3.042 3.175 3.174 3.175 Year 33 0.132 0.397 0.661 Month 10 Month 11 0.661% 0.397% 3.175 3.175 3.175 3.175 3.175 3.174 3.174 3.175 3.175 3.174 3.174 3.175 3.175 3.174 3.174 3.175 3.175 13.174 3.174 3.175 3.175 3.174 3.174 3.175 3.175 3.174 3.174 3.175 3.175 3.174 3.174 3.175 3.175 3.174 3.174 3.175 3.175 3.174 3.174 3.175 3.175 3.174 3.174 3.175 3.175 3.174 3.174 3.175 3.175 3.174 3.174 3.175 0.926 1.190 | 14 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 1.455 L TABLE 5 Nonresidential Real Property Mid-Month Convention Straight Line39 Years (for assets placed in service on or after May 13, 1993) | Year 1 Year 239 Year 40 Month 1 2.461% 2.564 0.107 Month 2 2.247% 2.564 0.321 Month 3 2.033% 2.564 0.535 Month 4 1.819% 2.564 0.749 Month Property Placed in Service Month 5 Month 6 Month 7 1.605% 1.391% 1.177% 2.564 2.564 2.564 0.963 1.177 1.391 | Month 8 0.963% 0.963% 2.564 1.605 | Month 9 | Month 10 0.749% 0.535% 2.564 2.564 1.819 2.033 Month 11 | Month 12 0.321% 0.107% 2.564 2.564 2.247 2.461