Olga is the proprietor of a small business. In 2018, the business's income, before consideration of any cost recovery or 179 deduction, is $250,000. Olga
Olga is the proprietor of a small business. In 2018, the business's income, before consideration of any cost recovery or 179 deduction, is $250,000. Olga spends $620,000 on new 7-year class assets and elects to take the 179 deduction on them. She does not claim any available additional first-year depreciation. Olga's cost recovery deduction for 2018, except for the cost recovery with respect to the new 7-year assets, is $95,000.
If required, round your answers to the nearest dollar.
a. What is the tentative amount of Olga's overall 179 deduction for the seven-year class assets before any income limitation? $
b. The total amount of Olga's 179 deduction for the seven-year class assets after any income limitation is $.
c. Olga's total cost recovery depreciation deduction (including any 179 deduction) is $.
d. What is the amount of any 179 carryforward? $
Click here to access the depreciation table to use for this problem.
Exhibit 5.6
MACRS Straight-Line Depreciation for Real Property Assuming Mid-Month Convention
| For Property Placed in Service after December 31, 1986: 27.5-Year Residential Real Property | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Recovery Year(s) | The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service): | |||||||||||
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
| 1 | 3.485 | 3.182 | 2.879 | 2.576 | 2.273 | 1.970 | 1.667 | 1.364 | 1.061 | 0.758 | 0.455 | 0.152 |
| 218 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 |
| 1927 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 | 3.637 |
| 28 | 1.970 | 2.273 | 2.576 | 2.879 | 3.182 | 3.485 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 | 3.636 |
| 29 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.152 | 0.455 | 0.758 | 1.061 | 1.364 | 1.667 |
| For Property Placed in Service after December 31, 1986, and before May 13, 1993: 31.5-Year Nonresidential Real Property | ||||||||||||
| Recovery Year(s) | The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service): | |||||||||||
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
| 1 | 3.042 | 2.778 | 2.513 | 2.249 | 1.984 | 1.720 | 1.455 | 1.190 | 0.926 | 0.661 | 0.397 | 0.132 |
| 219 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 |
| 2031 | 3.174 | 3.174 | 3.174 | 3.174 | 3.174 | 3.174 | 3.174 | 3.174 | 3.174 | 3.174 | 3.174 | 3.174 |
| 32 | 1.720 | 1.984 | 2.249 | 2.513 | 2.778 | 3.042 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 | 3.175 |
| 33 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.132 | 0.397 | 0.661 | 0.926 | 1.190 | 1.455 |
| For Property Placed in Service after May 12, 1993: 39-Year Nonresidential Real Property | ||||||||||||
| Recovery Year(s) | The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service): | |||||||||||
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
| 1 | 2.461 | 2.247 | 2.033 | 1.819 | 1.605 | 1.391 | 1.177 | 0.963 | 0.749 | 0.535 | 0.321 | 0.107 |
| 239 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 |
| 40 | 0.107 | 0.321 | 0.535 | 0.749 | 0.963 | 1.177 | 1.391 | 1.605 | 1.819 | 2.033 | 2.247 | 2.461 |
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Authors: Walter B. Meigs, A. N. Mosich, Robert F. Meigs
2nd Edition
0070412901, 978-0070412903
