Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2018. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2018: Asset Office furniture Machinery Used delivery truck Cost $ 150, eee 1,560, ee 40,000 Date Placed in Service 02/03/2018 07/22/2018 08/17/2018 *Not considered a luxury automobile. During 2018. Karane was very successful and had no $179 limitations) and decided to acquire more assets in 2019 to increase its production capacity. These are the assets acquired during 2019: Asset Computers & info. system Luxury autot Assembly equipment Storage building Cost $ 400,00 89, eee 1,200, eae 780, eee Date Placed in Service 03/31/2019 25/26/2019 88/15/2019 11/13/2019 tused 100% for business purposes. Karane generated taxable income in 2019 of $1,732,500 for purposes of computing the $179 expense. (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.) 3-Year Depreciation Rate for Recovery Period 5-Year 7-Year 10-Year 15-Year 20.00% 14.29% 10.00% 5.00% 20-Year 3.750% Year 1 33.33% Year 2 44.45 24.49 18.00 9.50 7.219 32.00 19.20 Year 3 14.81 17.49 14.40 8.55 6.677 7.41 11.52 7.70 6.177 Year 4 Year 5 Year 6 12.49 8.93 11.52 9.22 11.52 6.93 5.713 5.76 7.37 6.23 5.285 8.92 8.93 Year 7 6.55 5.90 4.888 Year 8 4.46 6.55 5.90 4.522 Year 9 6.56 5.91 4.462 Year 10 6.55 5.90 4.461 4.462 3.28 5.91 Year 11 Year 12 4.461 Year 13 5.90 5.91 5.90 4.462 4.461 Year 14 Year 15 4.462 5.91 2.95 4.461 Year 16 Year 17 4.462 Year 18 4.461 Year 19 4.462 Year 20 4.461 Year 21 2.231 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 Year 8 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 23.47 Year 3 18.00 16.76 Year 4 11.37 11.97 Year 5 11.37 8.87 Year 6 4.26 8.87 Year 7 8.87 Year 8 3.34 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 Year 8 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 8.73 Year 8 7.64 Month 3 Month 9 Month 1 3.485% Month 2 3.182% 3.636 Month 4 2.576% 2.879% 3.636 3.636 3.636 Month 8 1.364% 3.636 3.636 3.637 1.061% 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.636 3.637 Month Property Placed in Service Month 5 Month 6 Month 7 2.273% 1.970% 1.667% 3.636 3.636 3.636 3.637 3.637 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.637 3.636 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.637 3.637 3.637 3.637 3.637 Year 1 Year 2-9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23 Year 24 Year 25 Year 26 Year 27 Year 28 Year 29 3.636 3.637 3.636 3.636 3.637 Month 10 Month 11 Month 12 0.758% 0.455% 0.152% 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 1.061 1.364 1.667 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.636 3.637 3.636 3.636 3.637 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.637 3.637 3.636 3.637 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.636 2.576 3.636 2.879 3.636 3.182 3.636 3.485 1.97 2.273 3.636 3.636 0.152 3.636 0.455 0.758 Month 10 Month 11 Month 12 0.661% 3.175 3.175 0.397% 3.175 3.175 3.174 3.175 0.132% 3.175 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.174 3.175 3.175 3.174 3.175 3.174 3.175 TABLE 4 Nonresidential Real Property Mid-Month Convention Straight Line31.5 Years (for assets placed in service before May 13, 1993) Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Year 1 3.042% 2.778% 2.513% 2.249% 1.984% 1.720% 1.455% 1.190% 0.926% Year 2-7 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 Years 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.175 Year 9 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 10 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 11 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 12 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 13 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 14 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 15 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 16 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 17 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 18 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 19 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 20 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 21 3.174 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 22 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 23 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.115 3.174 Year 24 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 25 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.174 3.175 3.174 3.174 3.175 3.175 3.174 3.175 3.174 3.174 3.175 3.175 3.174 3.174 3.175 3.175 3.174 3.175 3.175 3.174 3.174 3.175 3.175 3.175 3.174 3.174 3.175 3.174 3.175 3.175 3.174 3.174 3.175 3.174 3.175 3.174 3.175 Year 26 3.175 3.174 3.175 3.174 3.174 3.174 3.175 3.175 3.174 3.175 3.175 3.174 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.174 3.174 3.175 3.175 3.174 3.174 3.175 Year 27 Year 28 Year 29 Year 30 Year 31 Year 32 Year 33 3.175 3.174 3.175 3.175 3.174 3.175 3.175 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.174 3.175 3.174 0.397 3.175 3.174 3.174 3.175 3.174 3.174 3.175 3.174 1.720 3.174 3.175 3.175 3.174 1.984 2.249 2.513 2.778 3.042 3.175 3.175 3.174 0.132 0.661 0.926 1.190 1.455 Month 10 Month 11 TABLE 5 Nonresidential Real Property Mid-Month Convention Straight Line39 Years (for assets placed in service on or after May 13, 1993) Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Year 1 2.461% 2.247% 2.033% 1.819% 1.605% 1.391% 1.177% 0.963% 0.749% Year 2-39 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 Year 40 0.107 0.321 0.535 0.749 0.963 1.177 1.391 1.819 Month 12 0.107% 0.535% 0.321% 2.564 2.564 2.033 2.564 2.247 1.605 2.461 EXHIBIT 10-10 Automobile Depreciation Limits Year Placed in Service 2019* 2017 Recovery Year 1 Recovery Year 2 Recovery Year 3 Recovery Year 4 and after 10,000** 16.000 9.600 5.760 2018 10,000* 16,000 9,600 5,760 3.160* 5.100 3,050 1,875 2016 3,160* 5.100 3,050 1.875 *As of press date, the IRS had not released the 2019 limitations for automobiles, so throughout the chapter we use the same limitations as in 2018 for 2019. **$8,000 additional depreciation is allowed when bonus depreciation is claimed ($168(k) (2) (F)]. b. Compute the maximum 2019 depreciation deductions, including 5179 expense (ignoring bonus depreciation). Description Cost Sec. 179 Expense MACRS Basis Current MACRS Depreciation Total Depreciation Deduction S 0 2018 Assets Office furniture Machinery Used delivery truck 0 0 2019 Assets Computers & Info System Luxury Auto Assembly Equipment Storage Building OOOO Totals S S 0 S S c. Compute the maximum 2019 depreciation deductions, including $179 expense, but now assume that karane would like to take bonus depreciation. Description Cost Sec. 179 Expense Bonus MACRS Basis Current MACRS Depreciation Total Depreciation Deduction S 2018 Assets Office furniture Machinery Used delivery truck 0 2019 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building 0 Totals S 0 S 0 S S 0 S 0 d. Now assume that during 2019, Karane decides to buy a competitor's assets for a purchase price of $1,350,000. Compute the maximum 2019 cost recovery, including 5179 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, 880 230,000 25e,eee 198,880 2,eee 430,880 2e, eee Date Placed in Service 89/15/2019 29/15/2019 89/15/2019 29/15/2019 89/15/2019 29/15/2019 09/15/2019 Description Cost Sec. 179 Expense Bonus MACRS Basis Current MACRS Depreciation Total Depreciation Deduction S 0 2018 Assets Office furniture Machinery Used delivery truck 0 0 2010 Assets Computers & Info System Luxury Auto Assembly Equipment Storage Building OOOO 0 0 Inventory Office Furniture Machinery Patent Goodwill 0 0 Building Land 0 Totals S 0 S 0 S 0 S 0 S Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2018. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2018: Asset Office furniture Machinery Used delivery truck Cost $ 150, eee 1,560, ee 40,000 Date Placed in Service 02/03/2018 07/22/2018 08/17/2018 *Not considered a luxury automobile. During 2018. Karane was very successful and had no $179 limitations) and decided to acquire more assets in 2019 to increase its production capacity. These are the assets acquired during 2019: Asset Computers & info. system Luxury autot Assembly equipment Storage building Cost $ 400,00 89, eee 1,200, eae 780, eee Date Placed in Service 03/31/2019 25/26/2019 88/15/2019 11/13/2019 tused 100% for business purposes. Karane generated taxable income in 2019 of $1,732,500 for purposes of computing the $179 expense. (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.) 3-Year Depreciation Rate for Recovery Period 5-Year 7-Year 10-Year 15-Year 20.00% 14.29% 10.00% 5.00% 20-Year 3.750% Year 1 33.33% Year 2 44.45 24.49 18.00 9.50 7.219 32.00 19.20 Year 3 14.81 17.49 14.40 8.55 6.677 7.41 11.52 7.70 6.177 Year 4 Year 5 Year 6 12.49 8.93 11.52 9.22 11.52 6.93 5.713 5.76 7.37 6.23 5.285 8.92 8.93 Year 7 6.55 5.90 4.888 Year 8 4.46 6.55 5.90 4.522 Year 9 6.56 5.91 4.462 Year 10 6.55 5.90 4.461 4.462 3.28 5.91 Year 11 Year 12 4.461 Year 13 5.90 5.91 5.90 4.462 4.461 Year 14 Year 15 4.462 5.91 2.95 4.461 Year 16 Year 17 4.462 Year 18 4.461 Year 19 4.462 Year 20 4.461 Year 21 2.231 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 Year 8 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 23.47 Year 3 18.00 16.76 Year 4 11.37 11.97 Year 5 11.37 8.87 Year 6 4.26 8.87 Year 7 8.87 Year 8 3.34 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 Year 8 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 8.73 Year 8 7.64 Month 3 Month 9 Month 1 3.485% Month 2 3.182% 3.636 Month 4 2.576% 2.879% 3.636 3.636 3.636 Month 8 1.364% 3.636 3.636 3.637 1.061% 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.636 3.637 Month Property Placed in Service Month 5 Month 6 Month 7 2.273% 1.970% 1.667% 3.636 3.636 3.636 3.637 3.637 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.637 3.636 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.637 3.637 3.637 3.637 3.637 Year 1 Year 2-9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23 Year 24 Year 25 Year 26 Year 27 Year 28 Year 29 3.636 3.637 3.636 3.636 3.637 Month 10 Month 11 Month 12 0.758% 0.455% 0.152% 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.636 3.636 1.061 1.364 1.667 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.636 3.637 3.636 3.636 3.637 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.637 3.637 3.636 3.637 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.636 2.576 3.636 2.879 3.636 3.182 3.636 3.485 1.97 2.273 3.636 3.636 0.152 3.636 0.455 0.758 Month 10 Month 11 Month 12 0.661% 3.175 3.175 0.397% 3.175 3.175 3.174 3.175 0.132% 3.175 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.174 3.175 3.175 3.174 3.175 3.174 3.175 TABLE 4 Nonresidential Real Property Mid-Month Convention Straight Line31.5 Years (for assets placed in service before May 13, 1993) Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Year 1 3.042% 2.778% 2.513% 2.249% 1.984% 1.720% 1.455% 1.190% 0.926% Year 2-7 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 Years 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.175 Year 9 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 10 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 11 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 12 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 13 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 14 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 15 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 16 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 17 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 18 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 19 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 20 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 21 3.174 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 22 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 23 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.115 3.174 Year 24 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 25 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.174 3.175 3.174 3.174 3.175 3.175 3.174 3.175 3.174 3.174 3.175 3.175 3.174 3.174 3.175 3.175 3.174 3.175 3.175 3.174 3.174 3.175 3.175 3.175 3.174 3.174 3.175 3.174 3.175 3.175 3.174 3.174 3.175 3.174 3.175 3.174 3.175 Year 26 3.175 3.174 3.175 3.174 3.174 3.174 3.175 3.175 3.174 3.175 3.175 3.174 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.174 3.174 3.175 3.175 3.174 3.174 3.175 Year 27 Year 28 Year 29 Year 30 Year 31 Year 32 Year 33 3.175 3.174 3.175 3.175 3.174 3.175 3.175 3.174 3.175 3.174 3.174 3.175 3.174 3.175 3.174 3.175 3.174 0.397 3.175 3.174 3.174 3.175 3.174 3.174 3.175 3.174 1.720 3.174 3.175 3.175 3.174 1.984 2.249 2.513 2.778 3.042 3.175 3.175 3.174 0.132 0.661 0.926 1.190 1.455 Month 10 Month 11 TABLE 5 Nonresidential Real Property Mid-Month Convention Straight Line39 Years (for assets placed in service on or after May 13, 1993) Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Year 1 2.461% 2.247% 2.033% 1.819% 1.605% 1.391% 1.177% 0.963% 0.749% Year 2-39 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 Year 40 0.107 0.321 0.535 0.749 0.963 1.177 1.391 1.819 Month 12 0.107% 0.535% 0.321% 2.564 2.564 2.033 2.564 2.247 1.605 2.461 EXHIBIT 10-10 Automobile Depreciation Limits Year Placed in Service 2019* 2017 Recovery Year 1 Recovery Year 2 Recovery Year 3 Recovery Year 4 and after 10,000** 16.000 9.600 5.760 2018 10,000* 16,000 9,600 5,760 3.160* 5.100 3,050 1,875 2016 3,160* 5.100 3,050 1.875 *As of press date, the IRS had not released the 2019 limitations for automobiles, so throughout the chapter we use the same limitations as in 2018 for 2019. **$8,000 additional depreciation is allowed when bonus depreciation is claimed ($168(k) (2) (F)]. b. Compute the maximum 2019 depreciation deductions, including 5179 expense (ignoring bonus depreciation). Description Cost Sec. 179 Expense MACRS Basis Current MACRS Depreciation Total Depreciation Deduction S 0 2018 Assets Office furniture Machinery Used delivery truck 0 0 2019 Assets Computers & Info System Luxury Auto Assembly Equipment Storage Building OOOO Totals S S 0 S S c. Compute the maximum 2019 depreciation deductions, including $179 expense, but now assume that karane would like to take bonus depreciation. Description Cost Sec. 179 Expense Bonus MACRS Basis Current MACRS Depreciation Total Depreciation Deduction S 2018 Assets Office furniture Machinery Used delivery truck 0 2019 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building 0 Totals S 0 S 0 S S 0 S 0 d. Now assume that during 2019, Karane decides to buy a competitor's assets for a purchase price of $1,350,000. Compute the maximum 2019 cost recovery, including 5179 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, 880 230,000 25e,eee 198,880 2,eee 430,880 2e, eee Date Placed in Service 89/15/2019 29/15/2019 89/15/2019 29/15/2019 89/15/2019 29/15/2019 09/15/2019 Description Cost Sec. 179 Expense Bonus MACRS Basis Current MACRS Depreciation Total Depreciation Deduction S 0 2018 Assets Office furniture Machinery Used delivery truck 0 0 2010 Assets Computers & Info System Luxury Auto Assembly Equipment Storage Building OOOO 0 0 Inventory Office Furniture Machinery Patent Goodwill 0 0 Building Land 0 Totals S 0 S 0 S 0 S 0 S
