During its current tax year (year one), a pharmaceutical company purchased a mixing tank that had a fair market price of $123,000. It replaced an older, smaller mixing tank that had a BV of $15,000. Because a special promotion was underway, the old tank was used as a trade-in for the new one, and the cash price (including delivery and installation) was set at $93,000. The MACRS class life for the new mixing tank is 9.5 years

GDS Recovery Rates (r ) for the Six Personal Property Classes Recovery Period (and Property Class) Year 3-year 5-year 7-year 10-year 15-year 20-year 0.3333 0.2000 0.1429 0.1000 0.0500 0.0375 0.4445 0.3200 0.2449 0.1800 0.0950 0.0722 0. 1481 0. 1920 0. 1749 0.1440 0.0855 0.0668 0.0741 0. 1152 0.1249 0.1152 0.0770 0.0618 0. 1152 0.0893 0.0922 0.0693 0.0571 0.0576 0.0892 0.0737 0.0623 0.0528 0.0893 0.0655 0.0590 0.0489 0.0446 0.0655 0.0590 0.0452 0.0656 0.0591 0.0447 0.0655 0.0590 0.0447 11 0.0328 0.0591 0.0446 12 0.0590 0.0446 13 0.0591 0.0446 14 0.0590 0.0446 15 0.0591 0.0446 16 0.0295 0.0446 17 0.0446 18 0.0446 19 0.0446 20 0.0446 21 0.0223a. Under the GDS, what is the depreciation deduction in year two? The depreciation deduction in year two is 15D. {Round to the nearest dollar] h. Under the GDS, I.I'rhat is the Bin" at the end of year tour? The B'U' at the end of year tour is ED. {Round to the nearest dollar} c. if 200% DE depreciation had been applied to this problem, 'I'I'hat would he the cumulative depreciation through the end of year four? The cumulative depreciation through the end ot year four is 5D. {Round to the nearest dollar.) MACRS Class Lives and Recovery Periods Recovery Periods Asset Class Descriptions of Assets Class Life GDS ADS 00.11 Office furniture and equipment 10 7 10 00.12 Information systems, including computers 00.22 Automobiles, taxis 00.23 Buses 00.241 Light general purpose trucks 00.242 Heavy general purpose trucks 00.26 Tractor units for use over the road 01.1 Agriculture 10.0 Mining 13.2 Production of petroleum and natural gas 13.3 Petroleum refining 15.0 Construction 22.3 Manufacture of carpets 24.4 Manufacture of wood products and furniture 28.0 Manufacture of chemicals and allied products 9.5 9.5 30.1 Manufacture of rubber products 14 32.2 Manufacture of cement 20 20 34.0 Manufacture of fabricated metal products 12 12 36.0 Manufacture of electronic components, products, and systems 6 5 6 37.11 Manufacture of motor vehicles 12 7 12 37.2 Manufacture of aerospace products 10 7 10 48.12 Telephone central office equipment 18 10 18 49.13 Electric utility steam production plant 28 20 28 49.21 Gas utility distribution facilities 35 20 35 79.0 Recreation 10 7 10