Question
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
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
- Tax based on tax rate schedule Y-1 ( use Taxable income NCG)
__________
What is the tax bracket (marginal rate) for them on Y-1? ____%
- Tax on Capital Gains:
- 28% x __________ (if any) = Tax on collectibles
- 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 ___________
- 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 ____________
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