Dean and Ellen Price are married and have a manufacturing business.
They bought a piece of business equipment (7-year personal property) on 4/1/2018 for $50,000.Usehalf-year conventionto calculate the MACRS depreciation deduction on the equipment for 2018 and 2019.
They also has a pick-up truck used for business (5-year recovery period) acquired on 8/23/2018 for $25,000. On 11/15/2019, he sold the pick-up truck for $24,000. Use thehalf-year conventionto calculate the MACRS depreciation on the truck for 2018 and 2019.
On 10/26/2019 Dean sold his old storage building used for his business for $220,000.They purchased the building in 2001 for $100,000. Total depreciation (accumulated depreciation) taken on the building is $20,000.
His 2019 Business income and expenditures (Schedule -C):
Sales$ 657,500
Cost of goods sold$ 315,000
Other business expenses (incl. deprecation taken on the storage building)$ 140,000
In 2019 Dean also sold various assets. The information about the selling price and depreciation of the property is listed below.
Placed in Service / Initial Cost 2019 Depr. Accumulated Tax Basis= Initial Purchased Sold on Amount Depreciation. Depr. Allowed) Cost - Depr. on Allowed 2,175 Office tables 10/16/2019 4/4/2018 For $2,900 $3,000 $375 $825 Office chairs 11/8/2019 5,800 3/1/2015 For $4,000 $8,000 $1,000 $2,200 Marketable 12/1/2019 12,000 securities 2/1/2019 For $20,000 $12,000 SO Land held for 11/29/2019 45,000 investment 7/1/2018 For $48,000 $45,000 SO SOPart I: MACRS Depreciations and Adjusted Basis 2018: Date Date MACRS Rate Initial Cost 2018 MACRS Acquired Disposed (3) (4) Depreciation (1) (2) Deduction (5) = (3)*(4) Business N/A 14.29% 50,000 7, 145 Equipment Pick-up Truck 20% 25,000 5,000 2019 Depreciation Date Date MACRS Rate Initial Cost 2019 MACRS Acquired Disposed Depreciation Deduction Business N/A 24.49% 50,000 12,245 Equipment Pick-up Truck 32% 25,000 4,000 (Sold during the year) (25,000 x 32%) x 1/2)2019 Tax Basis Date Date Initial Cost Accumulated Acquired Disposed Tax Basis at year (3) Depreciation end (1) (2) (4) (5) = (3)-(4). Business N/A 50,000 19390 Equipment 30,610 Pick-up Truck 25,000 9000 16,000Part II. Summary Sheet for the Sales of Business Property (Form 4797) Step 1) Sales or Exchanges of Property Used in a Trade or Business (Held for More Than 1 Year) Description of Date Gain or property (1) acquired (2) (loss) (4-6) Description Date Date Sold Gross Sales Accumulated Adj. Basis of property acquired Price Depreciation Step 3). Descriptions of Section 1245 property: 1) 2) 5) 6) 7) Description Date Accumulated Amount of Remaining of property acquired Depreciation Gain Gain = reported as Ordinary (4) ' (6) (Lesser of 4 3 (a) Net the gainsfloss in A,B,C,D 3 (b) Total Amount reported on (6) above: 3 (c) = 3(a)3(b) (Remaining Section 1231 Gain) (Part II. continued) Summary Sheet for the Sales of Business Property Step 4. Description of Section 1250 property 1) 2) 3) 4) 5 6 7) Description Date Date Sold Gain Depreciation Unrecaptured Remaining of property acquired allowed $1250 Gain. Gain = (Accumulated (4) - (6) Depreciation) Building 20,000 4(a) = Remaining Section 1231 Gain from 3(c): 4(b): Total Unrecaptured $1250 Gain on 6) above 4(c) = 4(a) -4(b)Part III. Summary Sheet on the Sales of Capital Assets (Form 8949) 1). Short-tem'l Description Date Date Sold Gross Sales Depreciation Cost Basis Gain or of property acquired Price allowed (loss) Mkt 8000 securities 2) Long-term Description Date Date Sold Gross Sales Depreciation Cost Basis Gain or of property acquired Price allowed (loss) Wine collection Summary for Capital Gains and Losses: 1.Net Short-term totals - 2. Net Long-term totals Part IV: Netting Process Short-term Capital Gains Long-term Capital Gain (LTCG) and Loss Carry-overs (10,000) Collectibles Unrecaptured Net Sec. 1231 Other Long- $ 1250 Gain Gain term capital 8,000 gain Net the Short-term Capital Amount from Part III, Net Gain or Losses above = Part II, 4(c) LTCG, (2,000) excluding Collectibles Amount from Part II, 4(b) Use the above amount to net against Collectibles, Unrecaptured Sec. 1250 Gain, LTCG, etc. on the right Net Capital Gain
