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Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2022. 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 2022. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2022:

Asset Cost Date Placed in Service
Office furniture $ 150,000 02/03/2022
Machinery 1,560,000 07/22/2022
Used delivery truck*Note: 40,000 08/17/2022

*Note:Not considered a luxury automobile.

During 2022, Karane was very successful (and had no 179 limitations) and decided to acquire more assets in 2023 to increase its production capacity. These are the assets acquired during 2023:

Asset Cost Date Placed in Service
Computers and information system $ 400,000 03/31/2023
Luxury auto*Note: 80,000 05/26/2023
Assembly equipment 1,200,000 08/15/2023
Storage building 700,000 11/13/2023

*Note:Used 100% for business purposes.

Karane generated taxable income in 2023 of $1,732,500 for purposes of computing the 179 expense limitation.

a. Compute the maximum 2022 depreciation deductions, including 179 expense (ignoring bonus depreciation).

b. Compute the maximum 2023 depreciation deductions, including 179 expense (ignoring bonus depreciation).

c. Compute the maximum 2023 depreciation deductions, including 179 expense, but now assume that Karane would like to take bonus depreciation.

d. Now assume that during 2023, Karane decides to buy a competitor's assets for a purchase price of $1,350,000. Compute the maximum 2023 cost recovery, including 179 expense and bonus depreciation. Karane purchased the following assets for the lump-sum purchase price:

Note: Round your final answers to the nearest whole dollar amount.

Asset Cost Date Placed in Service
Inventory $ 220,000 09/15/2023
Office furniture 230,000 09/15/2023
Machinery 250,000 09/15/2023
Patent 198,000 09/15/2023
Goodwill 2,000 09/15/2023
Building 430,000 09/15/2023
Land 20,000 09/15/2023

Assume that Karane takes the maximum section 179 expense for the Assembly Equipment.

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