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.Use half-year convention to 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 the half-year convention to 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 / Purchased on

Sold on

Initial Cost

2019 Depr. Amount

Accumulated

Depreciation. (Depr. Allowed)

Tax Basis= Initial Cost - Depr. Allowed

Office tables

4/4/2018

10/16/2019

For $2,900

$3,000

$375

$825

2175

Office chairs

3/1/2015

11/8/2019

For $4,000

$8,000

$1,000

$2,200

5800

Marketable securities

2/1/2019

12/1/2019

For $20,000

$12,000

$0

$0

12000

Land held for investment

7/1/2018

11/29/2019

For $48,000

$45,000

$0

$0

45000

In 2019 Dean sold his wine collection for $9,000, which is bought two years ago for $8,000.

They also has a short-term capital loss carryover of $10,000 from 2009.

Part I: MACRS Depreciations and Adjusted Basis

2018:

Date Acquired

(1)

Date Disposed

(2)

MACRS Rate

(3)

Initial Cost

(4)

2018 MACRS Depreciation Deduction

(5) = (3)*(4)

BusinessEquipment

N/A

14.29

50000

7145

Pick-up Truck

20.00

25000

5000

2019 Depreciation

Date Acquired

Date Disposed

MACRS Rate

Initial Cost

2019 MACRS Depreciation Deduction

BusinessEquipment

N/A

220000

Pick-up Truck

(Sold during the year)

25000

2019 Tax Basis

Date Acquired

(1)

Date Disposed

(2)

Initial Cost

(3)

Accumulated Depreciation

(4)

Tax Basis at year end

(5) = (3)-(4).

Business Equipment

N/A

Pick-up Truck

2019 Net Schedule-C Business income

_184, 880 ________________________________________

+ Fit to page [D Page view A Read aloud 1.. Add notes 9-40 CHAPTER 9 Property Acquisition and Cost Recovery Appendix MACRS Tables TABLE 1 MACRS Half-Year Convention Depreciation Rate for Recovery Period Year 3-year 5-year 7-year 10-year 15-year 20-year 33.33 20.00 14.29 10.00 5.00 3.750 44.45 32.00 24.49 18.00 9.50 7.219 14.81 19.20 17.49 14.40 8.56 6.677 7.41 1.52 12.49 11.52 7.70 6.177 11.52 8.93 9.22 6.93 5713 5.76 8.92 7.37 6.23 6.285 8.93 6.56 5.90 4.838 4.46 6.55 5.90 4.522 6.56 5.9 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 2.96 4.461 4.462 4.461 4.462 4.461 2.231 TABLE 2a MACRS Mid-Quarter Convention: For property