MACRS basic application - Assume a company that started business in 2xd purchased office furniture on February 14, 2xx3, at a price of $10,000. Further assume that this was the only purchase of assets in the year and that no special depreciation rules apply. The equipment is Office equipment classified as MACRS 7-year property. What should the company consider given that this is its only property placed in service for the year? What is the tax depreciation expense for 2xx3? What is the tax depreciation expense for 2xx4? What if, the company placed the equipment in service in November instead of February, what would need to change from the original example? Depreciation expense for 2xx3? Depreciation expense for 2xx4? Determining Cost Basis - Jose purchased a delivery van for his business through an online auction His winning bid for the van was $24,500. In addition, Jose incurred the following expenses before using the van: shipping costs of $650, paint to match the other fleet vehicles at a cost of $1,000 registration costs of $3,200, which included $3,000 of sales tax and a registration fee of $200, wash and detailing for $50, and an engine tune-up for $250. Determining Cost Basis - Jose purchased a delivery van for his business through an online auction His winning bid for the van was $24,500. In addition, Jose incurred the following expenses before using the van: shipping costs of $650, paint to match the other fleet vehicles at a cost of $1,000 registration costs of $3,200, which included $3,000 of sales tax and a registration fee of $200, wash and detailing for $50, and an engine tune-up for $250. What is Jose's cost basis for the delivery van? What class asset is the van? What tax depreciation expense should he take in the first year (service year)? Personal to Business Use Asset Basis-Brittany started a law practice as a sole proprietor. She owned a computer, printer, desk, and file cabinet she purchased during law school (several years ago) that she is planning to use in her business. Basis - Business $ Asset Computer Printer Desk File cabinet Purchase Price 5,500 3,300 4,200 3,200 FMV at Time Converted to Business Use 3,800 3,150 4,000 3,225 179 Election --Nicholas Inc. placed into service $50,000 of 5-year property in year 1. Assume that Nicholas Inc. is not subject to the taxable income limitation for a 179 expense What is MACRS year 1 depreciation expense? What is 179 election expense