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 Date placed in Asset Cost Service Office furniture $ 180,000 02/03/2020 Machinery 1,566,000 07/22/2020 Used delivery truck 46,000 88/17/2020 *Not considered a luxury automobile. During 2020, Karane was very successful and had no 8179 limitations and decided to acquire more assets in 2021 to increase its production capacity. These are the assets acquired during 2021 Date Placed In Asset Cost Service Computers and information system $ 406,eee 3/31/2021 Luxury autot 81,500 05/26/2021 Assembly equipment 1,230,000 68/15/2021 Storage building 709,000 11/13/2021 Used 100% for business purposes Karane generated taxable income in 2021 of $1.740,000 for purposes of computing the $179 expense limitation (Use MACRS Table 1. Table 2. Table 3. Table 4. Table S, 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). Description Cost 5179 Expense MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction Office furniture Machinery Used delivery truck Total EXHIBIT 10-10 Automobile Depreciation Limits Recovery Year 1 2 3 4 and after 2021 10,100" 16,100 9,700 5,760 Year Placed in Service 2020 2019 10.100** 10,100** 16,100 16,100 9,700 9,700 5,760 5,760 2018 10.000** 16,000 9.600 5.760 "As of press date, the IRS had not released the 2021 limitations for automobiles, so throughout the chapter we use the same limitations as in 2020 for 2027 **$8,000 additional depreciation is allowed when bonus depreciation is claimed (5/68(2)(2)(F)). TABLE 5 Nonresidential Real Property Mid Menth Covesti Straight line 19 Years placed in more May 13, 1993) Moth Property Maced in Service Month 1 Moth Meath Moth 4 Months Meath Month 7 Meaths Meath Year! 2.4615 2013 1314 1605 13914 11774 0939 7404 Year 2-39 2.564 2.566 2564 2564 2.568 2564 Year 40 0.107 0321 0535 0.709 0.963 1177 1191 1603 Month 10 05359 3.564 2033 Mouth 11 001 2554 M12 107 2.1 Mouth 12 3775 3115 315 315 1114 31 311 31 SEE 111 TABLE 4 Nonresidential Real Property Mid Month Convention Straight line 31.5 Years (forsets placed in service for May 13, 1995) Month Property Placedia Service Meath 1 Month 2 Mosth3 Must 4 Meath $ Mach 6 Meath Meaths Meath Meath 10 Month 11 Year! 30499 2778% 25139. 2.9.1946 19845 11201 165546 119 0966 06619 6.1974 Year 27 3775 3175 3.115 3.175 3 175 3175 3.175 3.175 3.175 3.175 Years 3175 1170 3175 3114 3175 3.17 3175 1175 2175 3175 3175 Year 9 3.174 3175 3115 3174 3.175 3174 5115 3.11 3115 1174 Year 10 3175 3114 3.173 314 3175 117 3175 3.114 3115 3114 3 125 Year 11 3174 3175 3.174 3.715 14 3170 3115 1110 1115 Year 12 3.175 3.174 3:175 3175 3175 3114 3.125 11 3.175 Year 13 3144 3.175 3174 3115 1116 1115 3124 1115 Year 14 3.375 1110 3175 3.114 3175 15 3124 311 1173 Year 15 3174 1.115 111 14 3115 30 113 11 1176 Year 16 3.125 3.175 3170 317 3175 175 1175 3.174 3175 3.174 3135 3176 2S 314 175 3.114 3.15 Year 18 3114 314 3.115 111 3373 3.10 3110 3175 Year 19 1125 3.114 31 9374 3114 31 3.17 3175 Year 20 195 1 119 175 3174 Year 21 3175 30 3.10 3173 TE 3174 117 3.115 115 3110 3.113 Year 22 3114 11 3175 3:174 Year 23 3173 1114 3175 17 1174 3.175 3.11 Year24 3114 311 1175 3130 31 Year 25 3114 72 Motyoudy - 3175 3074 NIE SELE TALE cal LE 3.179 311 SITE THE SELE TE FASE TILE CITE SLE 2194 2179 NE SIE 13 TE 3.11 SI 3175 3175 3.174 1174 3115 3125 1171 3175 3.175 3.174 3.175 3.174 3.175 3174 3.175 3174 1.720 Year 24 Year 25 Year 26 Year 27 Year 25 Year 29 Year 30 Year 1 Year 32 Year33 3.174 3.175 3.174 3.175 3 174 3175 3124 3.175 1.984 3.1 3.174 3175 3.174 3175 3.174 3175 174 3.175 3.174 3175 1174 1175 3174 1.195 TI 3.174 3.175 3 174 1175 1174 3115 3170 3175 3 174 3.175 3194 3.175 3114 2770 1113 3174 175 1114 3194 3.175 3.124 3175 300 3174 3175 3174 3175 1174 1173 1 11 3175 3.174 3175 3114 3175 114 111 3114 0936 7174 1173 3174 15 1714 1174 3174 3.175 2513 3146 3115 114 191 239 SIE 1990 0611 12 012 11:35 PM AV 2203 Molly duty Month 8 1 364% 3.636 3.636 3.637 3.636 3.637 3.636 3.637 7.5 Years TABLE 3 Residential Rental Property Mid Month Convention Straight Line Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Year 1 3.182% 3.485% 2.879% 2.576% 2273% 1970% 1 66796 Year 29 3.636 3.636 3.636 3.636 3.636 3.636 3.636 Year 10 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 11 3.636 3636 3636 3.636 3.636 3.636 3637 Year 12 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 13 3.636 3636 3636 3.636 3.636 3.636 3.637 Year 14 3.637 3.637 3.637 3637 3.637 3637 3636 Year 15 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 16 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 17 3.636 3.636 3.636 3636 3.636 3.636 3.637 Year 18 3.637 3.637 3.637 3697 3.637 3.637 3.636 Year 19 3.636 3.636 3.636 3636 3.636 3.636 3637 Year 20 3.637 3.637 3.637 3637 3.637 3.637 3.636 Year 21 3636 3636 3.636 3636 3.636 3.636 3.637 Year 22 3.637 3637 3.637 3.637 3.637 3.637 Year 23 3.636 3.636 3.636 3636 3636 3.636 Year 24 3.637 3637 3.637 3.637 3.637 3637 3.636 Year 25 3.636 3.636 3.636 3636 3.636 3.636 3.637 Year 26 3637 1637 3637 3.637 3637 3.632 3.636 Year 27 3636 3636 3.636 3636 3636 3636 3637 3.636 3.637 3.636 3.637 3.636 Month 9 Month 10 Month 11 Month 12 1.061% 0.758% 0.455% 0.152% 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3 637 3.637 3.636 3.636 3.636 3.636 3.637 3637 3.637 3.637 3.636 3.636 3.636 3.636 3637 3.637 3.632 3.637 3636 3.636 3.636 3.636 3.637 3.637 3 637 3.637 3.636 3.636 3.636 3 636 3 637 3.637 3.637 3.637 3636 3.636 3.636 3.636 3637 3.637 3.637 3.637 3.637 3.636 3636 3.637 3.637 3.636 3637 3.636 3.637 Type here to search hear 2 3.636 3.637 Year 26 Year 27 Year 28 Year 29 3.636 3.637 3.636 197 3.636 3.637 3.636 2.576 3.636 3.637 3.636 2.879 3636 3.637 3636 3.182 3.636 3637 3.636 3455 3.636 2.273 3.637 3.636 3.63% 5.636 0152 3637 3636 3.637 3.636 04153 3.637 3.636 3.637 3636 0.738 3.637 3.636 3637 3.636 1061 3.637 3.636 3.69 3.636 1364 3.637 3.636 3617 3.636 1.667 TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 35.00% 25.00% Year 2 26.00 21.43 Year 3 15.60 15.31 Year 4 11.01 10.93 Year 5 11.01 8.75 Year 6 1.38 8.74 Year 7 8.75 Years 1.09 TABLE 26 MACRS Mid-Quarter Convention: For property placed in service during the second quarter Depreciation Rate for Recovery Period 5-Year 7 Year Year 1 25.00% 17.85% Year 2 30.00 23.42 Year 3 18.00 16.76 Year 4 11.37 11.97 Year 3 11.37 8.87 Year 6 4.26 8.87 Year 7 8.87 Years 334 TABLE 2 MACRS Mid Quarter Convention: For properti placer Type here to search TABLE 2c MACRS Mid-Quarter Convention: For property placed in service during the third quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 15.00% 10.71% Year 2 34.00 25.51 Year 3 20.40 18.22 Year 4 12.24 13.02 Year 5 11.30 9.30 Year 6 7.06 8.85 Year 7 8.86 Years 5.53 TABLE 20 MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 5.00% 3.57% Year 2 38.00 27.55 Year 3 22.80 19.68 Year 4 13.68 14.06 Year 5 10.94 10.04 Year 6 9.58 8.73 Year 7 Years 7.64 8.73 Table I MACRS Half-Year Convention 20-Year Year 1 3.750% 7.219 Year 2 Year 3 Year 4 6.677 6.177 Year 5 Depreciation Rate for Recovery Period 3-Year 5-Year 7-Year 10-Year 15-Year 33.33% 20.00% 14.29% 10.00% 5.00% 44.45 32.00 24.49 18.00 9.50 14.81 19.20 17.49 14.40 8.55 7.41 11.52 12.49 11.52 7.70 11.52 8.93 9.22 6.93 5.76 8.92 7.37 6.23 8.93 6.55 5.90 4.46 6.55 5.90 6.56 5.91 6.55 5.90 3.28 5.91 5.90 5.91 590 5.713 5.285 Year 6 Year 7 Year 8 4.888 Year 9 4.522 4.462 4.461 Year 10 Year 11 Year 12 Year 13 Year 14 4.462 4.461 4.462 4.461 4.462 5.91 2.95 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 4.461 4.462 4.461 4.462 4.461 2.231 Type here to search