Question
On Jan 2, 2020 for $300,000 Depreciator purchases new equipment for his business. The purchase is made from an unrelated person. The equipment has 6-year
On Jan 2, 2020 for $300,000 Depreciator purchases new equipment for his business. The purchase is made from an unrelated person. The equipment has 6-year life and is 5-year property under 168(c). Depreciator plans to use the equipment for 7 years, and thinks it will have a salvage value of $30,000 at end of the 7 years. Depreciator is single, calendar year taxpayer, and uses the equipment ONLY in his business. In the following, compute the depreciation deductions for the equipment in each of the first TWO years of use & determine Depreciators adjusted basis for the equipment at end of the TWO years. a.He does not elect out of 168(k). b.He elects out of 168(k), but also elects to use 179. Assume he satisfies the 179 requirements and has not other 179 property in the year. c.He elects out of 168(k), and does not elect 179. d.Same as (c), above, except that he elects under 168(b)(5) to use the straight-line method for the equipment and other property in its class period in service during the year. e.Same as (c), above except that the equipment has a 6-year class life and he elects to use the 168(g) alternative depreciation system for the equipment and other property in the year. f.He purchases the equipment, which is used property, from an unrelated party and does not elect out of 168(k). g.Same as (f), above, except that He purchases the equipment from his sister. In general, what result? Please show computations so I can take good notes.
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