Part 5

Dean and Ellen Price are married and have a manufacturing business.

They bought a piece of business equipment (7-year personal property) on 4/1/2018 for $50,000. Use half-year convention to calculate the MACRS depreciation deduction on the equipment for 2018 and 2019

They also has a pick-up truck used for business (5-year recovery period) acquired on 8/23/2018 for $25,000. On 11/15/2019, he sold the pick-up truck for $24,000. Use the half-year convention to calculate the MACRS depreciation on the truck for 2018 and 2019.

On 10/26/2019 Dean sold his old storage building used for his business for $220,000. They purchased the building in 2001 for $100,000. Total depreciation (accumulated depreciation) taken on the building is $20,000.

His 2019 Business income and expenditures (Schedule -C):

Sales $ 657,500

Cost of goods sold $ 315,000

Other business expenses (incl. deprecation taken on the storage building) $ 140,000

In 2019 Dean also sold various assets. The information about the selling price and depreciation of the property is listed below.

	Placed in Service / Purchased on	Sold on	Initial Cost	2019 Depr. Amount	Accumulated Depreciation. (Depr. Allowed)	Tax Basis= Initial Cost Depr. Allowed
Office tables	4/4/2018	10/16/2019 For $2,900	$3,000	$375	$825
Office chairs	3/1/2015	11/8/2019 For $4,000	$8,000	$1,000	$2,200
Marketable securities	2/1/2019	12/1/2019 For $20,000	$12,000	$0	$0
Land held for investment	7/1/2018	11/29/2019 For $48,000	$45,000	$0	$0

In 2019 Dean sold his wine collection for $9,000, which is bought two years ago for $8,000.

• They also has a short-term capital loss carryover of $10,000 from 2009.

Part V. Self-Employment Tax Computation

2019 Net Schedule-C income (from page 2): ____________

2019 Self-Employment Tax: __________________

Social security tax = (The lesser of Net Sch-C income or $132,900)*12.4%, round up to nearest dollar: _____________

Medicare tax = (Net Schedule-C business income)*92.35%*2.9%, round up to nearest dollar: ________________

Total Self-Employment Tax = ___________

Part VI. Income Tax Computation

A. Net Capital Gains (NCG from page 6) ____________________

B. Other Gains (the amount for Part II 3(b) on page 3)

________

C. Taxpayer's AGI (Net Schedule-C income, NCG, Other Gains, less one-half of Self-employment tax)

AGI __________

D. Taxable Income before Qualified Business Income Deduction (AGI 2019 Standard Deduction for Married Filing Jointly):

_______________

E. Qualified Business Income Deduction (see page 8): __________

F: Taxable income: ________ (F=D-E)

G. Tax Computation

1. Tax based on tax rate schedule Y-1 ( use Taxable income NCG)

__________

What is the tax bracket (marginal rate) for them on Y-1? ____%

2. Tax on Capital Gains:

1. 28% x __________ (if any) = Tax on collectibles

2. For Unrecaptured Section 1250 gain, the applicable tax rate is the lesser of 25% or the marginal rate in step G(1) above.

Tax on Unrecaptured Section 1250 Gain ___________

3. Gains subject to the 15% tax rate ___________

3) Total Self-Employment Tax from Part V _______

Add G(1), G(2) and G(3), this is their total tax ____________