Question
Required information Skip to question [The following information applies to the questions displayed below.] Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began
Required information
Skip to question
[The following information applies to the questions displayed below.]
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2021. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2021:
Asset | Cost | Date Placed in Service |
---|---|---|
Office furniture | $ 220,000 | 02/03/2021 |
Machinery | 1,574,000 | 07/22/2021 |
Used delivery truck* | 54,000 | 08/17/2021 |
*Not considered a luxury automobile.
During 2021, Karane was very successful (and had no 179 limitations) and decided to acquire more assets in 2022 to increase its production capacity. These are the assets acquired during 2022:
Asset | Cost | Date Placed in Service |
---|---|---|
Computers and information system | $ 414,000 | 03/31/2022 |
Luxury auto* | 83,500 | 05/26/2022 |
Assembly equipment | 1,270,000 | 08/15/2022 |
Storage building | 800,000 | 11/13/2022 |
*Used 100% for business purposes.
Karane generated taxable income in 2022 of $1,750,000 for purposes of computing the 179 expense limitation. (Use MACRS Table 1, Table 2, Table 3, Table 4, Table 5, and Exhibit 10-10.)
Compute the maximum 2021 depreciation deductions, including $179 expense (ignoring bonus depreciation) b. Compute the maximum 2022 depreciation deductions, including $179 expense (ignoring bonus depreciation) c. Compute the maximum 2022 depreciation deductions, including $179 expense, but now assume that Karane would like to take bonus depreciation. d. Now assume that during 2022 , Karane decides to buy a competitor's assets for a purchase price of $1,433,860. Compute the maximum 2022 cost recovery, including $179 expense and bonus depreciation. Karane purchased the following assets for the lumpsum purchase price: Note: Round your final answers to the nearest whole dollar amount. Assume that Karane takes the maximum section 179 expense for the Assembly Equipment. Compute the maximum 2021 depreciation deductions, including $179 expense (ignoring bonus depreciation) b. Compute the maximum 2022 depreciation deductions, including $179 expense (ignoring bonus depreciation) c. Compute the maximum 2022 depreciation deductions, including $179 expense, but now assume that Karane would like to take bonus depreciation. d. Now assume that during 2022 , Karane decides to buy a competitor's assets for a purchase price of $1,433,860. Compute the maximum 2022 cost recovery, including $179 expense and bonus depreciation. Karane purchased the following assets for the lumpsum purchase price: Note: Round your final answers to the nearest whole dollar amount. Assume that Karane takes the maximum section 179 expense for the Assembly EquipmentStep by Step Solution
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