Karane Enterprises, a calendar year manufacturer based in College Station, Texas began business in 2017. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2017:

Asset Cost Date Place in Service

Office furniture $ 150,000 02/03/2017

Machinery 1,560,000 07/22/2017

Used delivery truck* 40,000 08/17/2017

*Not considered a luxury automobile.

During 2017, Karane was very successful (and had no 179 limitations) and decided to acquire more assets this next year to increase its production capacity. These are the assets acquired during 2018:

Asset Cost Date Place in Service

Computers & Info. System $ 400,000 03/31/2018

Luxury Auto 80,000 05/26/2018

Assembly Equipment 1,200,000 08/15/2018

Storage Building 700,000 11/13/2018

Used 100% for business purposes.

Karane generated taxable income in 2018 of $1,732,500 for purposes of computing the 179 expense.

Required

a) Compute the maximum 2017 depreciation deductions including 179 expense (ignoring bonus depreciation).

b) Compute the maximum 2018 depreciation deductions including 179 expense (ignoring bonus depreciation).

c) Compute the maximum 2018 depreciation deductions including 179 expense, but now assume that Karane would like to take bonus depreciation.

d) Now assume that during 2018, Karane decides to buy a competitors assets for a purchase price of $1,350,000. Compute the maximum 2018 cost recovery including 179 expense and bonus depreciation. Karane purchased the following assets for the lump-sum purchase price.

Asset Cost Date Placed in Service

Inventory $220,000 09/15/2018

Office furniture 230,000 09/15/2018

Machinery 250,000 09/15/2018

Patent 198,000 09/15/2018

Goodwill 2,000 09/15/2018

Building 430,000 09/15/2018

Land 20,000 09/15/2018

e. Complete Form 4562 (2017) for requirement b.