Modified Accelerated Cost Recovery System (MACRS), Election to Expense, Listed Property, Limitation on Depreciation of Luxury Automobiles (LO 8.2, 8.3, 8.4, 8.5) During 2020, William purchases the following capital assets for use in his catering business: $51,800 New passenger automobile (September 30) Baking equipment (June 30) 15,540 Assume that William decides to use the election to expense on the baking equipment (and has adequate taxable income to cover the deduction) but not on the automobile (which has a 5-year recovery period), and he also uses the MACRS accelerated method to calculate depreciation but elects out of bonus depreciation. Assume he has adequate taxable income. Click here to access the depreciation table and click here to access the annual automobile depreciation limitations. Calculate William's maximum depreciation deduction for 2020, assuming he uses the automobile 100 percent in his business. 25,900 x Modified Accelerated Cost Recovery System (MACRS) (LO 8.2) On May 8, 2020, Holly purchased a residential apartment building. The cost basis assigned to the building is $194,600. Holly also owns another residential apartment building that she purchased on October 15, 2020, with a cost basis of $140,000. Click here to access the depreciation tables. If required, round intermediate calculations and final answers to nearest dollar. a. Calculate Holly's total depreciation deduction for the apartments for 2020 using MACRS. $ 8,453.9 x Feedback b. Calculate Holly's total depreciation deduction for the apartments for 2021 using MACRS. Tom has a successful business with $100,000 of taxable income before the election to expense in 2020. He purchases one new asset in 2020, a new machine which is 7-year MACRS property and cost $25,000. You are Tom's tax advisor. Complete the memorandum regarding the options you would advise for Tom and the treatment of this machine for tax purposes in 2020. Click here to access the depreciation table. If required, round your final answers to the nearest dollar. Memorandum To: Tom Businessman From: Tax Advisor One option is to utilize Section 179 which, by election, would allow you to expense of the cost of the machine in 2020. If the Section 179 election is not made and assuming no bonus depreciation is taken, you would be allowed a MACRS deduction of $ . Bottom line, I would recommend the Section 179 election V to maximize your tax benefit in 2020