Intangible Assets (LO. 10) On April 18, 2020, Petros buys all the assets of Brigid's Muffler Shop. Included in the purchase price of $305,000 is a payment of $19,100 to Brigid not to open a competing shop in the state for a period of 5 years. Brigid's assets at the date of sale are as follows: Asset Adjusted basis Fair Market Value Inventory $8,900 $ 11,900 Equipment 3,600 29,400 Building 81,600 116,400 Patent 300 14,400 Land 5,100 9,300 The patent is on a special muffler that Brigid developed and patented 5 years ago. Petros would like to know the maximum amount of the deduction he will be allowed on the purchase of Brigid's assets for 2020. Refer to the MACRS Depreciation Tables to answer the following question. Note: Do not round any division. Round other computations to the nearest whole dollar. Assume the equipment has a MACRS recovery period of 7 years and that bonus depreciation is taken in the year of acquisition. The maximum amount of the deduction Petros will be allowed on the purchase of Brigid's assets for 2020 is $ 38,248 X. Feedback Check My Work To qualify for amortization, intangible assets must be used for a business purpose and must have a limited useful life that can be estimated with reasonable accuracy. MACRS Depreciation for Property Other Than Real Estate Applicable convention: mid-year (applicable methods: 200% or 150% declining balance, switching to straight-line) And the recovery period is 3 Years 5 Years 7 Years 10 Years 15 Years If the recovery year is The depreciation rate is 1 33.33 20.00 14.29 10.00 5.00 2 44.45 32.00 24.49 18.00 9.50 3 14.81 19.20 17.49 14.40 8.55 4 7.41 11.52 12.49 11.52 7.70 5 11.52 8.93 9.22 6.93 6 5.76 8.92 7.37 6.23 7 8.93 6.55 5.90 8 4.46 6.55 5.90 9 6.56 5.91 10 6.55 5.90 11 3.28 5.91 12 5.90 13 5.91 14 5.90 15 5.91 16 2.95 MACRS Depreciation for Residential Rental Real Estate Applicable convention: mid-month (applicable recovery period: 27.5 years) And the month in the first recovery year the property is placed in service is 1 2 3 4 5 6 7 8 9 10 11 12 If the recovery year is The depreciation rate is 1 3.485 3.182 2.879 2.576 2.273 1.970 1.667 1.364 1.061 0.758 0.455 0.152 2 - 27 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 28 1.970 2.273 2.576 2.879 3.182 3.485 3.636 3.636 3.636 3.636 3.636 3.636 29 0.000 0.000 0.000 0.000 0.000 0.000 0.152 0.455 0.758 1.061 1.364 1.667 MACRS Depreciation for Nonresidential Real Estate Placed in Service after May 12, 1993 Applicable convention: mid-month (applicable recovery period: 39 years) And the month in the first recovery year the property is placed in service is 1 2. 3 4 5 6 7 8 9 10 11 12 If the recovery year is The depreciation rate is 1 2.461 2.247 2.033 1.819 1.605 1.391 1.177 0.963 0.749 0.535 0.321 0.107 239 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 40 0.107 0.321 0.535 0.749 0.963 1.177 1.391 1.605 1.819 2.033 2.247 2.461 Intangible Assets (LO. 10) On April 18, 2020, Petros buys all the assets of Brigid's Muffler Shop. Included in the purchase price of $305,000 is a payment of $19,100 to Brigid not to open a competing shop in the state for a period of 5 years. Brigid's assets at the date of sale are as follows: Asset Adjusted basis Fair Market Value Inventory $8,900 $ 11,900 Equipment 3,600 29,400 Building 81,600 116,400 Patent 300 14,400 Land 5,100 9,300 The patent is on a special muffler that Brigid developed and patented 5 years ago. Petros would like to know the maximum amount of the deduction he will be allowed on the purchase of Brigid's assets for 2020. Refer to the MACRS Depreciation Tables to answer the following question. Note: Do not round any division. Round other computations to the nearest whole dollar. Assume the equipment has a MACRS recovery period of 7 years and that bonus depreciation is taken in the year of acquisition. The maximum amount of the deduction Petros will be allowed on the purchase of Brigid's assets for 2020 is $ 38,248 X. Feedback Check My Work To qualify for amortization, intangible assets must be used for a business purpose and must have a limited useful life that can be estimated with reasonable accuracy. MACRS Depreciation for Property Other Than Real Estate Applicable convention: mid-year (applicable methods: 200% or 150% declining balance, switching to straight-line) And the recovery period is 3 Years 5 Years 7 Years 10 Years 15 Years If the recovery year is The depreciation rate is 1 33.33 20.00 14.29 10.00 5.00 2 44.45 32.00 24.49 18.00 9.50 3 14.81 19.20 17.49 14.40 8.55 4 7.41 11.52 12.49 11.52 7.70 5 11.52 8.93 9.22 6.93 6 5.76 8.92 7.37 6.23 7 8.93 6.55 5.90 8 4.46 6.55 5.90 9 6.56 5.91 10 6.55 5.90 11 3.28 5.91 12 5.90 13 5.91 14 5.90 15 5.91 16 2.95 MACRS Depreciation for Residential Rental Real Estate Applicable convention: mid-month (applicable recovery period: 27.5 years) And the month in the first recovery year the property is placed in service is 1 2 3 4 5 6 7 8 9 10 11 12 If the recovery year is The depreciation rate is 1 3.485 3.182 2.879 2.576 2.273 1.970 1.667 1.364 1.061 0.758 0.455 0.152 2 - 27 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 28 1.970 2.273 2.576 2.879 3.182 3.485 3.636 3.636 3.636 3.636 3.636 3.636 29 0.000 0.000 0.000 0.000 0.000 0.000 0.152 0.455 0.758 1.061 1.364 1.667 MACRS Depreciation for Nonresidential Real Estate Placed in Service after May 12, 1993 Applicable convention: mid-month (applicable recovery period: 39 years) And the month in the first recovery year the property is placed in service is 1 2. 3 4 5 6 7 8 9 10 11 12 If the recovery year is The depreciation rate is 1 2.461 2.247 2.033 1.819 1.605 1.391 1.177 0.963 0.749 0.535 0.321 0.107 239 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 40 0.107 0.321 0.535 0.749 0.963 1.177 1.391 1.605 1.819 2.033 2.247 2.461