My question is what would the depreciation deduction for these assets be? Can you please send the equations too? Thanks!
Part I: 2020 Acquisitions 1) KK purchased an existing building (a mess hall/community building) from Camp Landaman, a failed deportment camp adjacent to KK's camp. KK purchased the property and began using the property on April 2, 2020. KK paid the seller $524,190 in cash. KK also agreed to assume a $ 76,000 loan that was secured by the property and released the seller from any further obligation on the loan. KK paid its lawyer, Lionel Hutz, $2,650 in fees to handle the closing on the property and file all of the necessary paperwork. KK also paid its real estate agent, Cookie Kwan, a $1,500 commission in connection with the sale. According to the Springfield Tax Assessor, the building has been assessed, for real estate tax purposes, at $140,000 and the value of the land has been assessed, for real estate tax purposes, at $50,000. 2) On February 6, 2020, KK purchased and placed in service a safe to use in its administrative offices to keep cash and important documents. The purchase price of the safe was $9,025. In addition, KK paid the 6% Idaho sales tax on the purchase price and also paid a $233.50 fee to have the safe delivered (the delivery fee is not subject to sales tax). All amounts were paid in cash. 3) On November 10, 2020, KK purchased and placed in service a luxury, pimped out bus used to transport campers. The bus cost $1,060,000, including all applicable registration fees, taxes, and other costs. KK paid cash of $60,000 and took out a loan of $1,000,000 to purchase the bus. Other Information: The above were the only asset purchases made in 2020. KK wants to elect to use the full Section 179 deduction available to it for 2020. Assume that taking the Section 179 deduction would not create or increase a loss for the company that is, KK has plenty of taxable income to absorb the Section 179 deduction). KK has decided that it wants to use the Section 179 deduction to expense as much of the bus as possible. KK elects to NOT take any bonus depreciation that is available to it in 2020. KK wants to use MACRS to depreciate its 2020 asset purchases. (It does not want to use any alternative depreciation methods.) Part I: 2020 Acquisitions 1) KK purchased an existing building (a mess hall/community building) from Camp Landaman, a failed deportment camp adjacent to KK's camp. KK purchased the property and began using the property on April 2, 2020. KK paid the seller $524,190 in cash. KK also agreed to assume a $ 76,000 loan that was secured by the property and released the seller from any further obligation on the loan. KK paid its lawyer, Lionel Hutz, $2,650 in fees to handle the closing on the property and file all of the necessary paperwork. KK also paid its real estate agent, Cookie Kwan, a $1,500 commission in connection with the sale. According to the Springfield Tax Assessor, the building has been assessed, for real estate tax purposes, at $140,000 and the value of the land has been assessed, for real estate tax purposes, at $50,000. 2) On February 6, 2020, KK purchased and placed in service a safe to use in its administrative offices to keep cash and important documents. The purchase price of the safe was $9,025. In addition, KK paid the 6% Idaho sales tax on the purchase price and also paid a $233.50 fee to have the safe delivered (the delivery fee is not subject to sales tax). All amounts were paid in cash. 3) On November 10, 2020, KK purchased and placed in service a luxury, pimped out bus used to transport campers. The bus cost $1,060,000, including all applicable registration fees, taxes, and other costs. KK paid cash of $60,000 and took out a loan of $1,000,000 to purchase the bus. Other Information: The above were the only asset purchases made in 2020. KK wants to elect to use the full Section 179 deduction available to it for 2020. Assume that taking the Section 179 deduction would not create or increase a loss for the company that is, KK has plenty of taxable income to absorb the Section 179 deduction). KK has decided that it wants to use the Section 179 deduction to expense as much of the bus as possible. KK elects to NOT take any bonus depreciation that is available to it in 2020. KK wants to use MACRS to depreciate its 2020 asset purchases. (It does not want to use any alternative depreciation methods.)
