On June 15, 2018, Chang purchases $2,537,000 of equipment (7-year property) for use in her business. It is her only purchase of business property in 2018. Chang has taxable income from her business of $2,500,000 before any cost recovery.

Click here to access depreciation Table 8-2.

a. Assuming Chang does not elect Section 179 and elects out of bonus depreciation, what is her total 2018 cost recovery? $

b. Assuming Chang elects the maximum Section 179 deduction allowable and elects out of bonus depreciation, what is her total 2018 cost recovery? $

c. Assuming Chang elects the maximum Section 179 deduction allowable and does not elect out of bonus depreciation, what is her total cost recovery? $

d. Assuming Chang does not elect Section 179 deduction allowable and does not elect out of bonus depreciation, what is her total cost recovery? $

On June 17, 2018, Donald purchased a passenger automobile at a cost of $56,000. The automobile is used 90 percent for qualified business use and 10 percent for personal purposes.

Click here to access the depreciation table and click here to access the annual automobile depreciation limitations.

Calculate the depreciation expense (without bonus depreciation) for the automobile for 2018, assuming half-year convention and no Section 179 immediate expensing. $

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 2018, William purchases the following capital assets for use in his catering business:

New passenger automobile (September 30)	$54,100
Baking equipment (June 30)	16,230

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 2018, assuming he uses the automobile 100 percent in his business. $