Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2019. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2019:

Asset	Cost		Date Placed in Service
Office furniture	$	150,000	02/03/2019
Machinery		1,560,000	07/22/2019
Used delivery truck*		40,000	08/17/2019

*Not considered a luxury automobile.

During 2019, Karane was very successful (and had no 179 limitations) and decided to acquire more assets in 2020 to increase its production capacity. These are the assets acquired during 2020:

Asset	Cost		Date Placed in Service
Computers & info. system	$	400,000	03/31/2020
Luxury auto		80,000	05/26/2020
Assembly equipment		1,200,000	08/15/2020
Storage building		700,000	11/13/2020

Used 100% for business purposes.

Karane generated taxable income in 2020 of $1,732,500 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.)

a. Compute the maximum 2019 depreciation deductions, including $179 expense (ignoring bonus depreciation). Description Office furniture Machinery Delivery truck Total 2019 Cost Recovery Current Total Cost Cost $179 Expense MACRS Basis MACRS Recovery Depreciation Deduction $ 150,000 $ 150,000 $ 21,4350 $ 21,435 1,560,000 850,000 195,000 47,756 897,756 40,000 40,000 8,000 8,000 $ 1,750,000 $ 850,000 $ 385,000 $ 77,191 $ 927,191 b. Compute the maximum 2020 depreciation deductions, including $179 expense (ignoring bonus depreciation). Description Cost Sec. 179 Expense MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction $ 2019 Assets Office furniture Machinery Used delivery truck 150,000 1,560,000 40,000 150,000 $ 195,000 40,000 36,735 $ 47,756 12,800 36,735 47,756 12,800 80,000 80,000 2020 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building 400,000 80,000 1,200,000 700,000 400,000 80,000 1,200,000 700,000 240,000 240,000 0 Total 2020 Cost Recovery $ 4,130,000 $ 0 $ 2,765,000 $ 417,291 $ 417,291 c. Compute the maximum 2020 depreciation deductions, including $179 expense, but now assume that karane would like to take bonus depreciation as well. Description Cost Sec. 179 Expense Bonus MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction $ $ 2019 Assets Office Furniture Machinery Used Delivery Truck 150,000 1,560,000 40,000 710,000 40,000 173,897 12,800 0 173,897 12,800 2020 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building 4,000,000 8,000 200,000 72,000 400,000 80,000 1,200,000 700,000 10,000 4,000,000 18,000 1,200,000 2,247 1,000,000 700,000 2,247 Total 2020 Cost Recovery $ 4,130,000 $ 1,000,000 $ 4,208,000 $ 1,522,000 $ 198,944 $ 5,406,944 d. Now assume that during 2020, Karane decides to buy a competitor's assets for a purchase price of $1,350,000. Compute the maximum 2020 cost recovery, including $179 expense and bonus depreciation. Karane purchased the following assets for the lump- sum purchase price: (Round your final answers to the nearest whole dollar amount.) Asset Inventory Office furniture Machinery Patent Goodwill Building Land Cost $220,000 230,000 250,000 198,000 2,000 430,000 20,000 Date Placed in Service 09/15/2020 09/15/2020 09/15/2020 09/15/2020 09/15/2020 09/15/2020 09/15/2020 Description Cost Sec. 179 Expense Bonus MACRS Basis Current MACRS Depreciation Current Amortization Total Cost Recovery Deduction S 0 2019 Assets Office Furniture Machinery Used Delivery Truck 0 0 0 2020 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building 0 0 0 0 Inventory Office Furniture Machinery Patent 0 0 Goodwill 0 Building Land 0 Totals 0 S 0 S 0 S 0 S 0 S 0 S 0 OMB No. 1545-0172 form 4562 Depreciation and Amortization (Including Information on Listed Property) Attach to your tax return. Go to www.irs.gov/Form4562 for instructions and the latest information. Business or activity to which this form relates 2019 Department of the Treasury Internal Revenue Service 90 Names) shown on return Attachment Sequence No. 179 Identifying number Part 1 Election To Expense Certain Property Under Section 179 Note: If you have any listed property, complete Part V before you complete Part I. 1 Maximum amount (see instructions) 2 Total cost of section 179 property placed in service (see instructions) 3 Threshold cost of section 179 property before reduction in limitation (see instructions) 4 Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter -- 5 Dollar limitation for tax year. Subtract line 4 from line 1. If zero or less, enter-O-. If married filing separately, see instructions (a) Description of property b) Cost business use only (c) Elected cost 1 2 3 4 5 6 service 7 Listed property. Enter the amount from line 29 7 8 Total elected cost of section 179 property. Add amounts in column (c), lines 6 and 7 8 9 Tentative deduction. Enter the smaller of line 5 or line 8. 9 10 Carryover of disallowed deduction from line 13 of your 2018 Form 4562. 10 11 Business income limitation. Enter the smaller of business income (not less than zero) or line 5. See instructions 11 12 Section 179 expense deduction. Add lines 9 and 10, but don't enter more than line 11 12 13 Carryover of disallowed deduction to 2020. Add lines 9 and 10, less line 12 13 Note: Don't use Part II or Part III below for listed property. Instead, use Part V. Part II Special Depreciation Allowance and Other Depreciation (Don't include listed property. See instructions.) 14 Special depreciation allowance for qualified property (other than listed property) placed in service during the tax year. See instructions. 14 15 Property subject to section 168(8 (1) election 15 16 Other depreciation (including ACRS) 16 Part III MACRS Depreciation (Don't include listed property. See instructions.) Section A 17 MACRS deductions for assets placed in service in tax years beginning before 2019. 17 18 If you are electing to group any assets placed in service during the tax year into one or more general asset accounts, check here Section B-Assets Placed in Service During 2019 Tax Year Using the General Depreciation System b) Month and year Ic Basis for depreciation (a) Classification of property placed in business/investment use (d) Recovery le) Convention ) Method (g) Depreciation deduction period only see instructions 19a 3-year property b5-year property c 7-year property d 10-year property e 15-year property f 20-year property g 25-year property S/L h Residential rental 27.5 yrs MM S/L property 27.5 yrs MM S/L i Nonresidential real MM S/L property MM S/L Section C-Assets Placed in Service During 2019 Tax Year Using the Alternative Depreciation System 20a Class life S/L b 12-year S/L c 30-year MM S/L d 40-year MM S/L Part IV Summary (See instructions.) 21 Listed property. Enter amount from line 28 21 22 Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on the appropriate lines of your return. Partnerships and corporations-see instructions 22 23 For assets shown above and placed in service during the current year, enter the portion of the basis attributable to section 263A costs. 23 For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 12906N Form 4562 (2019) 25 yrs 39 yrs 12 yrs 30 yrs 40 yrs Form 4562 2019 Page 2 Part V Listed Property (Include automobiles, certain other vehicles, certain aircraft, and property used for entertainment, recreation, or amusement.) Note: For any vehicle for which you are using the standard mileage rate or deducting lease expense, complete only 24a, 24b, columns (a) through (c) of Section A, all of Section B, and Section Cif applicable. Section A-Depreciation and Other Information (Caution: See the instructions for limits for passenger automobiles.) 24a Do you have evidence to support the business/investment use claimed? Yes No 24b If "Yes," is the evidence written? Yes No (c) (a) b) (e) (d) tal thi Business 40 Type of property ist Date placed investment Cost or other basis Basis for depreciation Recovery Method: Depreciation Elected section 179 vehicles first) business/investment in service percentage Convention period deduction cost use only) 25 Special depreciation allowance for qualified listed property placed in service during the tax year and used more than 50% in a qualified business use. See instructions. 25 26 Property used more than 50% in a qualified business use: a (c) (d) 11 % % 27 Property used 50% or less in a qualified business use: S/L- % S/L- % S/L- 28 Add amounts in column (h), lines 25 through 27. Enter here and on line 21, page 1 28 29 Add amounts in column (), line 26. Enter here and on line 7, page 1 29 Section B-Information on Use of Vehicles Complete this section for vehicles used by a sole proprietor, partner, or other "more than 5% owner," or related person. If you provided vehicles to your employees, first answer the questions in Section C to see if you meet an exception to completing this section for those vehicles. (al le) 30 Total business/investment miles driven during Vehicle 1 Vehicle 2 Vehicle 3 Vehicle 4 Vehicles Vehicles the year (don't include commuting miles) 31 Total commuting miles driven during the year 32 Total other personal (noncommuting) miles driven 33 Total miles driven during the year. Add lines 30 through 32 - 34 Was the vehicle available for personal Yes No Yes No Yes No Yes No Yes No Yes No use during off-duty hours? 35 Was the vehicle used primarily by a more than 5% owner or related person? DOOD 36 is another vehicle available for personal use? Section C-Questions for Employers Who Provide Vehicles for Use by Their Employees Answer these questions to determine if you meet an exception to completing Section B for vehicles used by employees who aren't more than 5% owners or related persons. See instructions. 37 Do you maintain a written policy statement that prohibits all personal use of vehicles, including commuting, by Yes No your employees? 38 Do you maintain a written policy statement that prohibits personal use of vehicles, except commuting, by your , 39 Do you treat all use of vehicles by employees as personal use? 40 Do you provide more than five vehicles to your employees, obtain information from your employees about the use of the vehicles, and retain the information received? 41 Do you meet the requirements concerning qualified automobile demonstration use? See instructions. Note: If your answer to 37, 38, 39, 40, or 41 is "Yes," don't complete Section B for the covered vehicles. Part VI Amortization (b) (e) Date amortization d) (d) Amortization Description of costs Amortizable amount Code section begins period or percentage 42 Amortization of costs that begins during your 2019 tax year (see instructions): Amortization for this year 43 Amortization of costs that began before your 2019 tax year. 44 Total. Add amounts in column (f). See the instructions for where to report 43 44 Form 4562 (2019) a. Compute the maximum 2019 depreciation deductions, including $179 expense (ignoring bonus depreciation). Description Office furniture Machinery Delivery truck Total 2019 Cost Recovery Current Total Cost Cost $179 Expense MACRS Basis MACRS Recovery Depreciation Deduction $ 150,000 $ 150,000 $ 21,4350 $ 21,435 1,560,000 850,000 195,000 47,756 897,756 40,000 40,000 8,000 8,000 $ 1,750,000 $ 850,000 $ 385,000 $ 77,191 $ 927,191 b. Compute the maximum 2020 depreciation deductions, including $179 expense (ignoring bonus depreciation). Description Cost Sec. 179 Expense MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction $ 2019 Assets Office furniture Machinery Used delivery truck 150,000 1,560,000 40,000 150,000 $ 195,000 40,000 36,735 $ 47,756 12,800 36,735 47,756 12,800 80,000 80,000 2020 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building 400,000 80,000 1,200,000 700,000 400,000 80,000 1,200,000 700,000 240,000 240,000 0 Total 2020 Cost Recovery $ 4,130,000 $ 0 $ 2,765,000 $ 417,291 $ 417,291 c. Compute the maximum 2020 depreciation deductions, including $179 expense, but now assume that karane would like to take bonus depreciation as well. Description Cost Sec. 179 Expense Bonus MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction $ $ 2019 Assets Office Furniture Machinery Used Delivery Truck 150,000 1,560,000 40,000 710,000 40,000 173,897 12,800 0 173,897 12,800 2020 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building 4,000,000 8,000 200,000 72,000 400,000 80,000 1,200,000 700,000 10,000 4,000,000 18,000 1,200,000 2,247 1,000,000 700,000 2,247 Total 2020 Cost Recovery $ 4,130,000 $ 1,000,000 $ 4,208,000 $ 1,522,000 $ 198,944 $ 5,406,944 d. Now assume that during 2020, Karane decides to buy a competitor's assets for a purchase price of $1,350,000. Compute the maximum 2020 cost recovery, including $179 expense and bonus depreciation. Karane purchased the following assets for the lump- sum purchase price: (Round your final answers to the nearest whole dollar amount.) Asset Inventory Office furniture Machinery Patent Goodwill Building Land Cost $220,000 230,000 250,000 198,000 2,000 430,000 20,000 Date Placed in Service 09/15/2020 09/15/2020 09/15/2020 09/15/2020 09/15/2020 09/15/2020 09/15/2020 Description Cost Sec. 179 Expense Bonus MACRS Basis Current MACRS Depreciation Current Amortization Total Cost Recovery Deduction S 0 2019 Assets Office Furniture Machinery Used Delivery Truck 0 0 0 2020 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building 0 0 0 0 Inventory Office Furniture Machinery Patent 0 0 Goodwill 0 Building Land 0 Totals 0 S 0 S 0 S 0 S 0 S 0 S 0 OMB No. 1545-0172 form 4562 Depreciation and Amortization (Including Information on Listed Property) Attach to your tax return. Go to www.irs.gov/Form4562 for instructions and the latest information. Business or activity to which this form relates 2019 Department of the Treasury Internal Revenue Service 90 Names) shown on return Attachment Sequence No. 179 Identifying number Part 1 Election To Expense Certain Property Under Section 179 Note: If you have any listed property, complete Part V before you complete Part I. 1 Maximum amount (see instructions) 2 Total cost of section 179 property placed in service (see instructions) 3 Threshold cost of section 179 property before reduction in limitation (see instructions) 4 Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter -- 5 Dollar limitation for tax year. Subtract line 4 from line 1. If zero or less, enter-O-. If married filing separately, see instructions (a) Description of property b) Cost business use only (c) Elected cost 1 2 3 4 5 6 service 7 Listed property. Enter the amount from line 29 7 8 Total elected cost of section 179 property. Add amounts in column (c), lines 6 and 7 8 9 Tentative deduction. Enter the smaller of line 5 or line 8. 9 10 Carryover of disallowed deduction from line 13 of your 2018 Form 4562. 10 11 Business income limitation. Enter the smaller of business income (not less than zero) or line 5. See instructions 11 12 Section 179 expense deduction. Add lines 9 and 10, but don't enter more than line 11 12 13 Carryover of disallowed deduction to 2020. Add lines 9 and 10, less line 12 13 Note: Don't use Part II or Part III below for listed property. Instead, use Part V. Part II Special Depreciation Allowance and Other Depreciation (Don't include listed property. See instructions.) 14 Special depreciation allowance for qualified property (other than listed property) placed in service during the tax year. See instructions. 14 15 Property subject to section 168(8 (1) election 15 16 Other depreciation (including ACRS) 16 Part III MACRS Depreciation (Don't include listed property. See instructions.) Section A 17 MACRS deductions for assets placed in service in tax years beginning before 2019. 17 18 If you are electing to group any assets placed in service during the tax year into one or more general asset accounts, check here Section B-Assets Placed in Service During 2019 Tax Year Using the General Depreciation System b) Month and year Ic Basis for depreciation (a) Classification of property placed in business/investment use (d) Recovery le) Convention ) Method (g) Depreciation deduction period only see instructions 19a 3-year property b5-year property c 7-year property d 10-year property e 15-year property f 20-year property g 25-year property S/L h Residential rental 27.5 yrs MM S/L property 27.5 yrs MM S/L i Nonresidential real MM S/L property MM S/L Section C-Assets Placed in Service During 2019 Tax Year Using the Alternative Depreciation System 20a Class life S/L b 12-year S/L c 30-year MM S/L d 40-year MM S/L Part IV Summary (See instructions.) 21 Listed property. Enter amount from line 28 21 22 Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on the appropriate lines of your return. Partnerships and corporations-see instructions 22 23 For assets shown above and placed in service during the current year, enter the portion of the basis attributable to section 263A costs. 23 For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 12906N Form 4562 (2019) 25 yrs 39 yrs 12 yrs 30 yrs 40 yrs Form 4562 2019 Page 2 Part V Listed Property (Include automobiles, certain other vehicles, certain aircraft, and property used for entertainment, recreation, or amusement.) Note: For any vehicle for which you are using the standard mileage rate or deducting lease expense, complete only 24a, 24b, columns (a) through (c) of Section A, all of Section B, and Section Cif applicable. Section A-Depreciation and Other Information (Caution: See the instructions for limits for passenger automobiles.) 24a Do you have evidence to support the business/investment use claimed? Yes No 24b If "Yes," is the evidence written? Yes No (c) (a) b) (e) (d) tal thi Business 40 Type of property ist Date placed investment Cost or other basis Basis for depreciation Recovery Method: Depreciation Elected section 179 vehicles first) business/investment in service percentage Convention period deduction cost use only) 25 Special depreciation allowance for qualified listed property placed in service during the tax year and used more than 50% in a qualified business use. See instructions. 25 26 Property used more than 50% in a qualified business use: a (c) (d) 11 % % 27 Property used 50% or less in a qualified business use: S/L- % S/L- % S/L- 28 Add amounts in column (h), lines 25 through 27. Enter here and on line 21, page 1 28 29 Add amounts in column (), line 26. Enter here and on line 7, page 1 29 Section B-Information on Use of Vehicles Complete this section for vehicles used by a sole proprietor, partner, or other "more than 5% owner," or related person. If you provided vehicles to your employees, first answer the questions in Section C to see if you meet an exception to completing this section for those vehicles. (al le) 30 Total business/investment miles driven during Vehicle 1 Vehicle 2 Vehicle 3 Vehicle 4 Vehicles Vehicles the year (don't include commuting miles) 31 Total commuting miles driven during the year 32 Total other personal (noncommuting) miles driven 33 Total miles driven during the year. Add lines 30 through 32 - 34 Was the vehicle available for personal Yes No Yes No Yes No Yes No Yes No Yes No use during off-duty hours? 35 Was the vehicle used primarily by a more than 5% owner or related person? DOOD 36 is another vehicle available for personal use? Section C-Questions for Employers Who Provide Vehicles for Use by Their Employees Answer these questions to determine if you meet an exception to completing Section B for vehicles used by employees who aren't more than 5% owners or related persons. See instructions. 37 Do you maintain a written policy statement that prohibits all personal use of vehicles, including commuting, by Yes No your employees? 38 Do you maintain a written policy statement that prohibits personal use of vehicles, except commuting, by your , 39 Do you treat all use of vehicles by employees as personal use? 40 Do you provide more than five vehicles to your employees, obtain information from your employees about the use of the vehicles, and retain the information received? 41 Do you meet the requirements concerning qualified automobile demonstration use? See instructions. Note: If your answer to 37, 38, 39, 40, or 41 is "Yes," don't complete Section B for the covered vehicles. Part VI Amortization (b) (e) Date amortization d) (d) Amortization Description of costs Amortizable amount Code section begins period or percentage 42 Amortization of costs that begins during your 2019 tax year (see instructions): Amortization for this year 43 Amortization of costs that began before your 2019 tax year. 44 Total. Add amounts in column (f). See the instructions for where to report 43 44 Form 4562 (2019)