Problem 8-11 Modified Accelerated Cost Recovery System (MACRS), Listed Property, Limitation on Depreciation of Luxury Automobiles (LO 8.2, 8.4, 8.5) During 2020, Pepe Guardio purchases the following property for use in his calendar year-end manufacturing business: Item Date Acquired Cost Manufacturing equipment (7 year) June 2 $50,000 Office furniture September 15 8,000 Office computer November 18 2,000 Passenger automobile (used 85 percent for business) Warehouse May 31 55,000 July 23 Building 170,000 Land 135,000 Pepe uses the accelerated depreciation method under MACRS, if available, and does not make the election to expense and elects out of a bonus depreciation. Use Form 4562 to report Pepe's depreciation expense for 2020. Enter all amounts as positive numbers. If required, round to the nearest dollar. If an amount is zero, enter "0". Click on the following links to access: Depreciation tables Annual automobile depreciation limitations Table 8.1: Recovery Periods for Assets Placed in Service After 1986. Part 111 MACRS Depreciation (Don't include listed property. See instructions.) Section A 17 17 MACRS deductions for assets placed in service in tax years beginning before 2020 18 If you are electing to group any assets placed in service during the tax year into one or more general asset accounts check here Section B-Assets Placed in Service During 2020 Tax Year Using the General Depreciation System (c) Basis for depreciation (a) Classification of (b) Month and year (business/investment (d) Recovery period (e) Convention placed in service (f) Method property use only-see instructions) (9) Depreciation deduction 19 a 3-year property b 5-year property c7-year property d 10-year property e 15-year property 20-year f property 25-year g property Residential h rental 25 y. SAL 27.5 yrs. MM SAL 27.5 yrs. MM S/L property Nonresidential real i 39 yrs. MM S/L property MM S/L Section C-Assets Placed in Service During 2020 Tax Year Using the Alternative Depreciation System 20a Class life S/L b 12-year 12 yrs. S/L C 30-year 30 yrs. MM S/L d 40-year 40 yrs. MM S/L 21 Part IV Summary (See instructions.) 21 Listed property. Enter amount from line 28 22 Total. Add amounts from line 12, lines 14 through 17, fines 19 and 20 in column (9), and line 21. Enter here and on the appropriate lines of your return. Partnerships and corporations-see instructions 23 For assets shown above and placed in service during the current year, enter the portion of the basis attributable to section 263A costs.. 23 22 For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 12906N Form 4562 (2020) Form 4562 (2020) Page 2 Part V Listed Property (Include automobiles, certain other vehicles, certain aircraft, and properly used for entertainment, recreation, or amusement. Note: For any vehicle for which you are using the standard mileage rate or deducting lease expense, complete only 24, 24, columns (a) through (c) of Section A, all of Section B, and Section Cif applicable. Section A-Depreciation and Other Information (Caution: See the instructions for lives for passenger automobiles.) 24a Do you have evidence to support the business/investment use claimed? Yes No 24b If "Yes," is the evidence written? 2 Yes No (a) (c) (d) (f) (9) (h) (i) Basis for Business/ Elected depreciation Type of property (list investment Cost or Depreciation section Date placed in arvice (business/ Recovery period Method/ Convention vehicles first) other basis deduction investment percentage cast use only) 25 Special depreciation allowance for qualified listed property placed in service during the tax year and used more 25 than 50% in a qualified business use. See instructions. 26 Property used more than 50% in a qualified business use: (b) (e) 179 90 94 27 Property used 50% or less in a qualified business use: S/L- 90 S/L- S/L- 28 28 Add amounts in column (h), lines 25 through 27. Enter here and on line 21, page 1 29 Add amounts in column (i), line 26. Enter here and on line 7, page 1 29 SRTerminale Vehicles Problem 8-11 Modified Accelerated Cost Recovery System (MACRS), Listed Property, Limitation on Depreciation of Luxury Automobiles (LO 8.2, 8.4, 8.5) During 2020, Pepe Guardio purchases the following property for use in his calendar year-end manufacturing business: Item Date Acquired Cost Manufacturing equipment (7 year) June 2 $50,000 Office furniture September 15 8,000 Office computer November 18 2,000 Passenger automobile (used 85 percent for business) Warehouse May 31 55,000 July 23 Building 170,000 Land 135,000 Pepe uses the accelerated depreciation method under MACRS, if available, and does not make the election to expense and elects out of a bonus depreciation. Use Form 4562 to report Pepe's depreciation expense for 2020. Enter all amounts as positive numbers. If required, round to the nearest dollar. If an amount is zero, enter "0". Click on the following links to access: Depreciation tables Annual automobile depreciation limitations Table 8.1: Recovery Periods for Assets Placed in Service After 1986. Part 111 MACRS Depreciation (Don't include listed property. See instructions.) Section A 17 17 MACRS deductions for assets placed in service in tax years beginning before 2020 18 If you are electing to group any assets placed in service during the tax year into one or more general asset accounts check here Section B-Assets Placed in Service During 2020 Tax Year Using the General Depreciation System (c) Basis for depreciation (a) Classification of (b) Month and year (business/investment (d) Recovery period (e) Convention placed in service (f) Method property use only-see instructions) (9) Depreciation deduction 19 a 3-year property b 5-year property c7-year property d 10-year property e 15-year property 20-year f property 25-year g property Residential h rental 25 y. SAL 27.5 yrs. MM SAL 27.5 yrs. MM S/L property Nonresidential real i 39 yrs. MM S/L property MM S/L Section C-Assets Placed in Service During 2020 Tax Year Using the Alternative Depreciation System 20a Class life S/L b 12-year 12 yrs. S/L C 30-year 30 yrs. MM S/L d 40-year 40 yrs. MM S/L 21 Part IV Summary (See instructions.) 21 Listed property. Enter amount from line 28 22 Total. Add amounts from line 12, lines 14 through 17, fines 19 and 20 in column (9), and line 21. Enter here and on the appropriate lines of your return. Partnerships and corporations-see instructions 23 For assets shown above and placed in service during the current year, enter the portion of the basis attributable to section 263A costs.. 23 22 For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 12906N Form 4562 (2020) Form 4562 (2020) Page 2 Part V Listed Property (Include automobiles, certain other vehicles, certain aircraft, and properly used for entertainment, recreation, or amusement. Note: For any vehicle for which you are using the standard mileage rate or deducting lease expense, complete only 24, 24, columns (a) through (c) of Section A, all of Section B, and Section Cif applicable. Section A-Depreciation and Other Information (Caution: See the instructions for lives for passenger automobiles.) 24a Do you have evidence to support the business/investment use claimed? Yes No 24b If "Yes," is the evidence written? 2 Yes No (a) (c) (d) (f) (9) (h) (i) Basis for Business/ Elected depreciation Type of property (list investment Cost or Depreciation section Date placed in arvice (business/ Recovery period Method/ Convention vehicles first) other basis deduction investment percentage cast use only) 25 Special depreciation allowance for qualified listed property placed in service during the tax year and used more 25 than 50% in a qualified business use. See instructions. 26 Property used more than 50% in a qualified business use: (b) (e) 179 90 94 27 Property used 50% or less in a qualified business use: S/L- 90 S/L- S/L- 28 28 Add amounts in column (h), lines 25 through 27. Enter here and on line 21, page 1 29 Add amounts in column (i), line 26. Enter here and on line 7, page 1 29 SRTerminale Vehicles