Question
Martinez Enterprises purchased a delivery truck on January 1, 2020, at a cost of $26,000. The truck has a useful life of 7 years with
Martinez Enterprises purchased a delivery truck on January 1, 2020, at a cost of $26,000. The truck has a useful life of 7 years with an estimated salvage value of $5,910. The straight-line method is used for book purposes. For tax purposes, the truck, having an MACRS class life of 7 years, is classified as 5-year property; the optional MACRS tax rate tables are used to compute depreciation. In addition, assume that for 2020 and 2021 the company has revenues of $212,000 and operating expenses (excluding depreciation) of $137,800. Compute income before income taxes for 2020 and 2021. 2020 2021 Income before income taxes Compute taxable income for 2020 and 2021. (Round answers to 0 decimal places, e.g. 45,892.) Taxable income for 2020 $enter taxable income for 2017 in dollars rounded to 0 decimal places Taxable income for 2021 Determine the total depreciation to be taken over the useful life of the delivery truck for both book and tax purposes. Book purposes $enter a dollar amount Tax purposes
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