Question

1 Approved Answer

Posted on Jul 10, 2024

Dain's Diamond Bit Drilling purchased the following assets this year. Asset Drill bits (5-year) Drill bits (5-year) Commercial building Purchase Date January 25 July 25

image text in transcribed

Dain's Diamond Bit Drilling purchased the following assets this year. Asset Drill bits (5-year) Drill bits (5-year) Commercial building Purchase Date January 25 July 25 April 22 Original Basis $ 96,500 98,250 314,000 Assume its taxable income for the year was $58,750 for purposes of computing the $179 expense (assume no bonus depreciation). (Use MACRS Table 1, Table 2. Table 3, Table 4 and Table 5.) (Leave no answer blank. Enter zero if applicable.) a. What is the maximum amount of $179 expense Dain's may deduct for the year? $179 expense Dain's Diamond Bit Drilling purchased the following assets this year. Asset Drill bits (5-year) Drill bits (5-year) Commercial building Purchase Date January 25 July 25 April 22 Original Basis $ 96,500 98, 250 314,000 Assume its taxable income for the year was $58,750 for purposes of computing the $179 expense (assume no bonus depreciation). (Use MACRS Table 1, Table 2. Table 3, Table 4 and Table 5.) (Leave no answer blank. Enter zero if applicable.) c. If the February drill bits' original basis was $2,599,000, what is the maximum amount of $179 expense Dain's may deduct for the year? $179 expense 20-Year 3.750% 7.219 Table 1 MACRS Half-Year Convention Depreciation Rate for Recovery Period 3-Year 5-Year 7-Year 10-Year 15-Year Year 1 33.33% 20.00% 14.29% 10.00% 5.00% Year 2 44.45 32.00 24.49 18.00 9.50 Year 3 14.81 19.20 17.49 14.40 8.55 Year 4 7.41 11.52 12.49 11.52 7.70 Year 5 11.52 8.93 9.22 6.93 Year 6 5.76 8.92 7.37 6.23 Year 7 8.93 6.55 5.90 Year 8 4.46 6.55 5.90 6.677 6.177 5.713 5.285 4.888 4.522 Year 9 6.56 5.91 4.462 Year 10 6.55 5.90 Year 11 3.28 5.91 4.461 4.462 4.461 Year 12 5.90 Year 13 5.91 4.462 Year 14 5.90 4.461 4.462 Year 15 5.91 Year 16 2.95 4.461 Year 17 4.462 Year 18 4.461 Year 19 4.462 Year 20 4.461 Year 21 2.231 1. Year TABLE 2 MACRS Mid-Quarter Couveuties: For properly placed in service during the first quarter Depreciation Rate for Recovery Period S-Year Year 1 35.00% 25.00% Year 2 26.00 Year 3 15.60 13.31 Year 4 11.01 10.93 Years 11.01 Year 6 1.35 8.74 Year 7 5.73 Years 1.09 TABLE 25 MACRS AGA-Quarter Convention: For property placed in serice during the ate quente Depreciation Rate for Recovery Period 5-Year 1-Year Year 1 17.53% Year 2 30.00 Year 3 18.00 16.76 Year 4 11.37 11.97 Year 5 11.37 Year 3.57 Year 7 Years TABLE 2 MACRS Mid-Quarter Convention: For gropery placed in serie during the bird quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 15.00% 10.7136 Year 2 34.00 25.51 20.40 18.22 Year 4 12.24 13.02 Years 11.30 9.30 Year 6 7.06 8.85 Year 7 8.86 Years 5.33 TABLE 2d MACRS-Mid Quarter Conventiou: For property placed is crice during the fourth quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 5.00% 3.5796 Year 2 38.00 27.55 Year 3 22.80 19.68 Year 4 13.68 14.06 Years 10.94 10.04 Year 6 9.58 8.73 Year 7 8.73 Year 3 7.64 Month 9 Month 8 1.364% 1.061 3.636 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.636 3.637 3.636 Month 10 Month 11 Month 12 0.758% 0.455% 0.152 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 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 Year 1 3.485% 3.182% 2.879% 2.576% 2.273% 1.970% 1.667% Year 2-9 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 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 3.636 3.636 3.636 3.636 3.636 3.637 Year 14 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 15 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 16 3.637 3.637 3.637 3.637 3.637 3.637 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 3.637 3.637 3.637 3.636 Year 19 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 20 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 21 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 22 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 23 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 24 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 25 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 26 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 27 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 28 1.97 2.273 2.576 2.879 3.182 3.485 3.636 Year 29 0.152 3.636 3.636 3.637 3.637 3.636 3.636 3.636 3.637 3.636 3.636 3.637 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.636 3.636 3.637 3.637 3.637 3.636 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 1.667 0.455 0.758 1.061 1.364 Mouth 12 0.1329 3.173 3.173 3.175 3.174 3.175 3.174 3.175 3.174 3.173 TABLE 4 Nouresidential Real Property Mid-Month Contentios Straight List315 Years (for assets placed in service before May 13, 1993) Mouth Property Placed in Service Mosch 1 Mouch 2 Mouch 3 Mouth 4 Months Mouch 6 Mouch 7 Mouch 8 Mouch 9 Year 1 3.0429 2.775% 2915% 1.934% 1.720% 1.190% 0.926% Year 2-7 3.173 3.175 3.175 3.173 3.173 3.175 3.173 3.173 3.173 Years 3.173 3.173 3.174 3.174 3.173 3.175 Year 9 3.174 3.173 3.174 3.173 3.173 3.173 Year 10 3.173 3.174 3.173 3.174 3.175 3.174 3.173 3.174 3.173 Year 11 3.175 3.174 3.173 3.174 3.173 3.174 3.175 3.174 Year 12 3.173 3.173 3.173 3.174 3.173 3.174 3.175 Year 13 3.174 3.173 3.174 3.173 3.174 3.173 3.174 3.174 Year 14 3.173 3.174 3.173 3.173 3.173 3.173 Year 15 3.174 3.173 3.174 3.173 3.175 3.174 3.173 3.174 Year 16 3.173 3.174 3.174 3.173 3.174 3.173 3114 Year 17 3.174 3.173 3.173 3.173 3.174 3.179 Year 15 3.173 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.173 Year 19 3.174 3.173 3.174 3.175 3.174 3.173 3.174 3.173 3.174 Year 20 3.173 3.174 3.173 3.174 3.173 3.174 3.173 3.173 Year 21 3.174 3.173 3.174 3.173 3.173 3.174 3.173 3.174 Year 22 3.173 3.174 3.173 3.174 3.173 3.173 3.174 3.173 Year 23 3.174 3.173 3.174 3.173 3.174 3.173 3.174 3.113 3.174 Year 24 3.173 3.174 3.175 3.174 3.175 3.174 3.173 3.175 Year 25 3.174 3.173 3.174 3.175 3.174 3.173 3.174 3.173 3.174 Year 26 3.173 3.174 3.173 3.174 3.173 3.174 3.173 3.174 3.173 Year 27 3.174 3.173 3.174 3.173 3.174 3.173 3.174 3.173 3.174 Year 25 3.173 3.174 3.173 3.174 3.173 3.174 3.173 3.173 Year 29 3.174 3.173 3.174 3.173 3.173 3.174 3.173 3.174 Year 30 3.173 3.174 3.173 3.174 3.173 3.173 3.173 Year 31 3.174 3.173 3.174 3.173 3.174 3.173 3.174 3.173 3.174 Year 32 1.720 1.954 2313 3.173 3.174 3.173 Year 33 0.132 0.397 0.661 Mouch 10 0.661% 3.173 3.173 3.173 3.174 3.173 3.174 3.173 3.174 3.173 3.174 3.173 3.174 3.173 3.174 3.173 3.174 3.173 3.174 3.175 3.174 3.173 3.174 3.173 3.174 3.173 3.174 0.925 Month 11 0.397% 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.173 3.174 3.173 3.174 3.175 3.174 3.173 3.174 3.173 3.174 3.175 3.174 3.175 3.174 3.175 1.190 9.194 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 1.433 TABLE 5 Nouresidential Real Property Mid-Mouth Convention Straight List39 Years (for assets placed in service ou or after May 13, 1993) Mouth Property Placed in Service Month 1 Mouch 2 Month 3 Mouth 4 Mouch 5 Mouth 6 Mouth Mouch 8 Mouth 9 Year 1 2.461% 2.0339% 1.519% 1.605% 1.391% 1.177% 0.963% 0.7499 Year 2-39 2.364 2.354 2.354 2.364 2.354 2.354 2.354 2.354 Year 40 0.107 0.321 0.335 0.749 0.963 1177 1391 1.603 1319 Mouch 10 0.535% 2.354 Month 11 0.321% 2.564 Mostk 12 0.1073 2.564 2.461