Elise purchased a new $2,850,000 five-year class asset on September 25, 2021. The asset was placed in service for business October 10, 2021. Assume this was the only asset purchased in 2021. Elise elected to take the maximum Section 179 expense deduction allowed but elected NOT to take additional first-year (bonus) depreciation. Elises taxable income for 2021 before the cost recovery on this asset was $700,000.

Be sure to show all of your calculations for each numbered item!! You must complete the assignment on this worksheet!

1. What is the maximum amount of 179 that Elise can elect in 2021?

2. What is the maximum of the Section 179 election that Elise can deduct in 2021? What happens to any Section 179 not deducted in 2021, if any?

3. What is the amount of Elises depreciable basis (fixed, constant total we have left to depreciate after we have subtracted 179, the amount we will use each year to go to the MACRS tables)?

4. What is the amount of MACRS depreciation Elise can take in 2021?

5. What is the total depreciation deduction, including Section 179, per Form 4562 Line 22, for 2021?

(See page 2 for #6 and #7 and Part II).

6. Elise sold the asset August 30, 2022 (during year 2). Selling price was $2,000,000.

a. What is the amount of regular (statutory) depreciation Elise can take in 2022 (year 2)?

b. What is Elises adjusted basis after the 2022 (year 2) cost recovery?

c. What is Elises taxable gain or loss?