Exercise 1

A.) In 2019, Erin purchased a solar heating system for her swimming pool at a cost of $3,500, how much could she claim as a tax credit?

B.) If she had purchased a $5,000 solar electric system for her principal home and a $4,500 solar heating system for a second residence (not for the swimming pool), how much could she claim as a tax credit?

Exercise 6

A.) On May 2, 2019, Scott purchased a commercial building. The cost basis assigned to the building is $600,000. Scott also owns a residential apartment building he purchased on June 15, 2018 with a cost basis of $400,000. Show Supporting Computations.

1. Calculate Scott's total depreciation deduction for the buildings for 2019, using the Modified Accelerated Cost Recovery System.

2. Calculate Scott's total depreciation deduction for the buildings for 2020, using the Modified Accelerated Cost Recovery System.

B.) Calculate the following amounts:

1.)The first year of depreciation on an auto used 100 percent in business, costing $30,000, purchased in May 2019. (No Section 179 or bonus depreciation).

2.) The second year of depreciation on a computer used exclusively for business, costing $7,000, purchased May 2018.

3.) The third year of depreciation on business furniture costing $1,000, purchased in July 2017, using the half-year convention and accelerated depreciation.

ANSWER: 1. $6,000. 20% $30,000 = $6,000, limited to $10,100 in 2019 2. $2,240 = 32% $7,000 3. $175 = 17.49% $1,000

C. Eva purchased office equipment (7-year property) for use in her business. She paid $12,600 for the equipment on July 1, 2019. Eva did not purchase any other property during the year. For 2019, her business had net income of $6,000, before depreciation on the office equipment and before considering the election to expense. Eva elects out of bonus depreciation.

1.) What is the maximum amount that Eva can elect to expense in 2019 under Section 179?

2.) What is the total depreciation (regular depreciation and the amount allowed as a 2019 deduction under the election to expense) on the office equipment for 2019, assuming Eva uses the accelerated method under MACRS and claims the maximum amount allowable under the election to expense?