Question
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2020. 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 2020. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2020:
Asset | Cost | Date Placed in Service |
---|---|---|
Office furniture | $ 230,000 | 02/03/2020 |
Machinery | 1,576,000 | 07/22/2020 |
Used delivery truck* | 56,000 | 08/17/2020 |
*Not considered a luxury automobile.
During 2020, Karane was very successful (and had no 179 limitations) and decided to acquire more assets in 2021 to increase its production capacity. These are the assets acquired during 2021:
Asset | Cost | Date Placed in Service |
---|---|---|
Computers and information system | $ 416,000 | 03/31/2021 |
Luxury auto | 84,000 | 05/26/2021 |
Assembly equipment | 1,280,000 | 08/15/2021 |
Storage building | 900,000 | 11/13/2021 |
Used 100% for business purposes.
Karane generated taxable income in 2021 of $1,752,500 for purposes of computing the 179 expense limitation. (Use MACRS Table 1, Table 2, Table 3, Table 4, Table 5, and Exhibit 10-10.) (Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.)
Required:
a. Compute the maximum 2020 depreciation deductions, including 179 expense (ignoring bonus depreciation).
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started