Question
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2021. In the process of setting up the business, Karane has acquired
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2021. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2021:
Asset | Cost | Date Placed in Service |
---|---|---|
Office furniture | $ 190,000 | 02/03/2021 |
Machinery | 1,568,000 | 07/22/2021 |
Used delivery truck* | 48,000 | 08/17/2021 |
*Not considered a luxury automobile.
During 2021, Karane was very successful (and had no 179 limitations) and decided to acquire more assets in 2022 to increase its production capacity. These are the assets acquired during 2022:
Asset | Cost | Date Placed in Service |
---|---|---|
Computers and information system | $ 408,000 | 03/31/2022 |
Luxury auto* | 82,000 | 05/26/2022 |
Assembly equipment | 1,240,000 | 08/15/2022 |
Storage building | 800,000 | 11/13/2022 |
Used 100% for business purposes.
Karane generated taxable income in 2022 of $1,742,500 for purposes of computing the 179 expense limitation. (Use MACRS Table 1, Table 2, Table 3, Table 4, Table 5, and Exhibit 10-10.)
Note: Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.
c. Compute the maximum 2022 depreciation deductions, including 179 expense, but now assume that Karane would like to take bonus depreciation.
Description | Cost | Section 179 Expense | Bonus | MACRS Basis | Current MACRS Depreciation | Total Cost Recovery Deduction |
2021 Assets | ||||||
Office Furniture | $190,000 | $0 | $0 | $190,000 | ? | $27,151 |
Machinery | 1,568,000 | ? | 0 | ? | ? | 109,747 |
Used Delivery Truck | 48,000 | 0 | 0 | 480,000 | ? | 9,600 |
2022 Assets | ||||||
Computers and Information System | 408,000 | 0 | ? | ? | ? | 81,600 |
Luxury Auto | 82,000 | 0 | ? | ? | ? | 11,717 |
Assembly Equipment | 1,240,000 | ? | ? | ? | ? | 1,240,000 |
Storage Building | 800,000 | 0 | 0 | 800,000 | 2,568 | 2,568 |
Total | $4,336,000 | $1,800,000 | $240,000 | $2,968,000 | $290,383 | $1,482,383 |
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