Janesway, LLC purchased machinery (7-year property) for use in its business on October 8, 2020. This was the only asset Janesway acquired during 2020. The cost of the machinery was $1,400,000. In addition to the purchase price, Janesway incurred the following additional costs in 2020: $8,000 to ship the machinery to Janesway's business location in Chicago, Illinois; $12,000 for installation costs to get the machinery operational in Janesway's business; $70,000 for sales tax on the purchase of the machinery; $10,000 for an annual tune up on the machinery; $20,000 of property taxes on Janesway's property (an annual tax on business property) What is Janesway's initial tax basis for the machinery on October 8, 2020? $ Janesway, LLC purchased machinery (7-year property) for use in its business on October 8, 2020. This was the only asset Janesway acquired during 2020. The cost of the machinery was $1,400,000. In addition to the purchase price, Janesway incurred the following additional costs in 2020: $8,000 to ship the machinery to Janesway's business location in Chicago, Illinois; $12,000 for installation costs to get the machinery operational in Janesway's business; $70,000 for sales tax on the purchase of the machinery; $10,000 for an annual tune up on the machinery; $20,000 of property taxes on Janesway's property (an annual tax on business property) Janesway elected NOT to claim 100% bonus depreciation on the machinery in 2020. However, the company would like to maximize its 2020 depreciation expense on the machinery even though it will not use 100% bonus depreciation. What is the maximum total amount of depreciation expense Janesway can claim with respect to the machinery in 2020? $ Janesway, LLC purchased machinery (7-year property) for use in its business on October 8, 2020. This was the only asset Janesway acquired during 2020. The cost of the machinery was $1,400,000. In addition to the purchase price, Janesway incurred the following additional costs in 2020: $8,000 to ship the machinery to Janesway's business location in Chicago, Illinois; $12,000 for installation costs to get the machinery operational in Janesway's business; $70,000 for sales tax on the purchase of the machinery; $10,000 for an annual tune up on the machinery; $20,000 of property taxes on Janesway's property (an annual tax on business property) Assuming that Janesway sells the machinery for $300,000 on April 15, 2023 and that the company does not sell any other assets in 2023, what is the character of the gain/(loss) that Janesway will report on its federal income tax return in 2023? Answer: Janesway, LLC purchased machinery (7-year property) for use in its business on October 8, 2020. This was the only asset Janesway acquired during 2020. The cost of the machinery was $1,400,000. In addition to the purchase price, Janesway incurred the following additional costs in 2020: $8,000 to ship the machinery to Janesway's business location in Chicago, Illinois; $12,000 for installation costs to get the machinery operational in Janesway's business; $70,000 for sales tax on the purchase of the machinery; $10,000 for an annual tune up on the machinery; $20,000 of property taxes on Janesway's property (an annual tax on business property) Assuming that Janesway sells the machinery for $300,000 on April 15, 2023 and that the company does not sell any other assets in 2023, what is the amount of the gain/(loss) that Janesway will report on its federal income tax return in 2023? $ Janesway, LLC purchased machinery (7-year property) for use in its business on October 8, 2020. This was the only asset Janesway acquired during 2020. The cost of the machinery was $1,400,000. In addition to the purchase price, Janesway incurred the following additional costs in 2020: $8,000 to ship the machinery to Janesway's business location in Chicago, Illinois; $12,000 for installation costs to get the machinery operational in Janesway's business; $70,000 for sales tax on the purchase of the machinery; $10,000 for an annual tune up on the machinery; $20,000 of property taxes on Janesway's property (an annual tax on business property) Assuming that Janesway continues to own the machinery, what will Janesway's adjusted tax basis in the machinery be at December 31, 2022? $
