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I just need solution for D & E. Thank you. Problem 8-38 (LO. 2, 3, 9) Lori, who is single, purchased 5-year class property for
I just need solution for D & E. Thank you.
Problem 8-38 (LO. 2, 3, 9) Lori, who is single, purchased 5-year class property for $200,000 and 7-year class property for $420,000 on May 20, 2020. Lori expects the taxable income derived from her business (before considering any amount expensed under 179) to be about $550,000. Lori has determined that she should elect immediate $ 179 expensing in the amount of $520,000, but she doesn't know which asset she should completely expense under $ 179. She does not claim any available additional first-year depreciation. Click here to access Exhibit 8.1 and the depreciation table to use for this problem. If an amount is zero, enter "0". a. Determine Lori's total cost recovery deduction if the 179 expense is first taken with respect to the 5-year class asset. 5-year class property Immediate expense deduction under 179 200,000 Regular MACRS 0 7-year class property Immediate expense deduction under $ 179 $ 320,000 Regular MACRS 14,290 Total deduction 534,290 Feedback Check My Work d. Determine the present value of the tax savings from the cost recovery deductions for both assets, assuming that Lori is in the 24% marginal tax state and Federal income bracket and that she elects 179 for the 7-year asset. Assume MACRS depreciation and a 6% discount rate with the following present value factors: Year Factor Year Factor 2020 1.000 2024 0.7921 2021 0.9434 2025 0.7473 2022 0.8900 2026 0.7050 2023 0.8396 2027 0.6651 Round each present value computation to the nearest dollar. The present value of the tax savings from the cost recovery deductions for both assets $ 122,490X. Feedback Check My Work Incorrect e. Assume the same facts as in part (d), except that Lori decides not to use 179 on either asset. Determine the present value of the tax savings under this choice. In addition, determine which option Lori should choose. Round each present value computation to the nearest dollar. 2022 0.8900 2026 0.7050 2023 0.8396 2027 0.6651 Round each present value computation to the nearest dollar. The present value of the tax savings from the cost recovery deductions for both assets $ 122,490 x Feedback Check My Work Incorrect e. Assume the same facts as in part (d), except that Lori decides not to use 179 on either asset. Determine the present value of the tax savings under this choice. In addition, determine which option Lori should choose. Round each present value computation to the nearest dollar. The present value of the tax savings under this choice is $ Lori should elect to expense the 7-year asset. Feedback Check My Work Partially correctStep by Step Solution
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