Problem 8-43 (Algorithmic) (LO. 2, 3, 9) On March 5, 2017, Javier Sanchez purchased and placed in service a new 7-year class asset costing $630,800 for use in his landscaping business, which he operates as a single member LLC (Sanchez Landscaping LLC). Compute the maximum deductions (including first year additional depreciation) that Javier Sanchez can claim with respect to this asset in 2017 and 2018. If required round your intermediate computations and final answers to the nearest dollar. Click here to access the depreciation table to use for this problem. The maximum 179 for 2017 is $510,000 and the reduction threshold is $2,030,000. and $ a. Javier Sanchez's total cost recovery deduction in 2017 is $ in 2018 b. Complete Javier's Form 4562 (page 1) for 2017. If an amount is zero, enter "0". Enter amounts as positive numbers. OMB No. 1545-0172 4562 Form Depreciation and Amortization 2017 Department of the (Including Information on Listed Property) Attachment Attach to your tax return. Treasury Internal Sequence No. 179 Information about Form 4562 and its separate instructions is at www.irs.gov/form4562. Revenue Service (99) Business or activity to which this form relates Sanch Name(s) shown on return Identifying number 123-45-67 Javi Sanchez Landscaping, LLO Election To Expense Certain Property Under Section 179 Part I Note: If you have any listed property, complete Part V before you complete Part I. 1 Maximum amount (see instructions) 1 Total cost of section 179 property placed in service (see instructions). 2 2 3 Threshold cost of section 179 property before reduction in limitation (see instructions) 3 f zero or less, enter -0-. 4 Reduction in limitation. Subtract line 3 from line 2. 4 from line 1. If zero or less, enter -0-. 5 Dollar limitation for tax year. Subtract line f married filing separately, see 5 instructions (b) Cost (business use (a) Description of property 6 (c) Elected cost only) Landscaping equipment 7 Listed property. Enter the amount from line 29. 7 8 Total elected cost of section 179 property. Add amounts in column (c), lines 6 and 7 Tentative deduction. Enter the smaller of line 5 or line 8 9 10 Carryover of disallowed deduction from line 13 of your 2016 Form 4562 10 11 Business income limitation. Enter the smaller of business income (not less than zero) or line 5 (see instructions) 11 Section 179 expense deduction. Add lines 9 and 10, but don't enter more than line 11.. 12 12 13 Carryover of disallowed deduction to 2018. Add lines 9 and 10, less line 12. . . . . 13 Note: Don't use Part II or Part III below for listed property. Instead, use Part V Special Depreciation Allowance and Other Depreciation (Don't include listed property.) (See instructions.) Part II 14 Special depreciation allowance for qualified property (other than listed property) placed in service during the tax year (see instructions). 14 15 Property subject to section 168(f)(1) election 15 .... 16 Other depreciation (including ACRS) 16 MACRS Depreciation (Don't include listed property.) (See instructions.) Part III Section A MACRS deductions for assets placed in service in tax years beginning before 2017 17 17 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 2017 Tax Year Using the General Depreciation System (b) Month and (c) Basis for depreciation (d) (a) Classification of (g) Depreciation (business/investment use only- (f) Method year placed in Recovery (e) Convention property deduction period service see instructions) 19a 3-year property b 5-year property c 7-year property 7 yrs d 10-year property e 15-year property f 20-year property 25 yrs S/L g 25-year property S/L h Residential rental 27.5 yrs. MM 27.5 yrs MM S/L property Nonresidential real 39 yrs. MM S/L MM S/L property Section C-Assets Placed in Service During 2017 Tax Year Using the Alternative Depreciation System Section C-Assets Placed in Service During 2017 Tax Year Using the Alternative Depreciation System 20a Class life S/L b 12-year 12 yrs. S/L 40 yrs M S/L c 40-year Part IV Summary (See instructions.) 21 Listed property. Enter amount from line 28 21 22 Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on the appropriate lines of your return. Partnerships and S corporations-see instructions 22 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 .. ... ... For Paperwork Reduction Act Notice, see separate instructions. Form 4562 (2017) Cat. No. 12906N Problem 8-43 (Algorithmic) (LO. 2, 3, 9) On March 5, 2017, Javier Sanchez purchased and placed in service a new 7-year class asset costing $630,800 for use in his landscaping business, which he operates as a single member LLC (Sanchez Landscaping LLC). Compute the maximum deductions (including first year additional depreciation) that Javier Sanchez can claim with respect to this asset in 2017 and 2018. If required round your intermediate computations and final answers to the nearest dollar. Click here to access the depreciation table to use for this problem. The maximum 179 for 2017 is $510,000 and the reduction threshold is $2,030,000. and $ a. Javier Sanchez's total cost recovery deduction in 2017 is $ in 2018 b. Complete Javier's Form 4562 (page 1) for 2017. If an amount is zero, enter "0". Enter amounts as positive numbers. OMB No. 1545-0172 4562 Form Depreciation and Amortization 2017 Department of the (Including Information on Listed Property) Attachment Attach to your tax return. Treasury Internal Sequence No. 179 Information about Form 4562 and its separate instructions is at www.irs.gov/form4562. Revenue Service (99) Business or activity to which this form relates Sanch Name(s) shown on return Identifying number 123-45-67 Javi Sanchez Landscaping, LLO Election To Expense Certain Property Under Section 179 Part I Note: If you have any listed property, complete Part V before you complete Part I. 1 Maximum amount (see instructions) 1 Total cost of section 179 property placed in service (see instructions). 2 2 3 Threshold cost of section 179 property before reduction in limitation (see instructions) 3 f zero or less, enter -0-. 4 Reduction in limitation. Subtract line 3 from line 2. 4 from line 1. If zero or less, enter -0-. 5 Dollar limitation for tax year. Subtract line f married filing separately, see 5 instructions (b) Cost (business use (a) Description of property 6 (c) Elected cost only) Landscaping equipment 7 Listed property. Enter the amount from line 29. 7 8 Total elected cost of section 179 property. Add amounts in column (c), lines 6 and 7 Tentative deduction. Enter the smaller of line 5 or line 8 9 10 Carryover of disallowed deduction from line 13 of your 2016 Form 4562 10 11 Business income limitation. Enter the smaller of business income (not less than zero) or line 5 (see instructions) 11 Section 179 expense deduction. Add lines 9 and 10, but don't enter more than line 11.. 12 12 13 Carryover of disallowed deduction to 2018. Add lines 9 and 10, less line 12. . . . . 13 Note: Don't use Part II or Part III below for listed property. Instead, use Part V Special Depreciation Allowance and Other Depreciation (Don't include listed property.) (See instructions.) Part II 14 Special depreciation allowance for qualified property (other than listed property) placed in service during the tax year (see instructions). 14 15 Property subject to section 168(f)(1) election 15 .... 16 Other depreciation (including ACRS) 16 MACRS Depreciation (Don't include listed property.) (See instructions.) Part III Section A MACRS deductions for assets placed in service in tax years beginning before 2017 17 17 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 2017 Tax Year Using the General Depreciation System (b) Month and (c) Basis for depreciation (d) (a) Classification of (g) Depreciation (business/investment use only- (f) Method year placed in Recovery (e) Convention property deduction period service see instructions) 19a 3-year property b 5-year property c 7-year property 7 yrs d 10-year property e 15-year property f 20-year property 25 yrs S/L g 25-year property S/L h Residential rental 27.5 yrs. MM 27.5 yrs MM S/L property Nonresidential real 39 yrs. MM S/L MM S/L property Section C-Assets Placed in Service During 2017 Tax Year Using the Alternative Depreciation System Section C-Assets Placed in Service During 2017 Tax Year Using the Alternative Depreciation System 20a Class life S/L b 12-year 12 yrs. S/L 40 yrs M S/L c 40-year Part IV Summary (See instructions.) 21 Listed property. Enter amount from line 28 21 22 Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on the appropriate lines of your return. Partnerships and S corporations-see instructions 22 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 .. ... ... For Paperwork Reduction Act Notice, see separate instructions. Form 4562 (2017) Cat. No. 12906N