Skem eBook Calculator Print Item Problem 8-3 Modified Accelerated Cost Recovery System (MACRS), Election to Expense (Section 179) (LO 8.2, LO 8.3) Mike purchases a new heavy-duty truck (5-year class recovery property) for his delivery service on April 30, 2018. No other assets were purchased during the year. The truck is not considered a passenger automobile for purposes of the listed property and luxury automobile limitations. The truck has a depreciable basis of $39,000 and an estimated useful life of 5 years. Assume half-year convention for tax. Click here to access the depreciation tables. a. Calculate the amount of depreciation for 2018 using financial accounting straight-line depreciation (not the straight-line MACRS election) over the truck's estimated useful life. $ 5,200 Feed y Wor Depreciation is the accounting process of allocating and deducting the cost of an asset over a period of years. MACRS allows taxpayers who invest in capital assets to write off an asset's cost over a period designated in the tax law and to use an accelerated method for depreciation of assets other than these. Under MACRS, taxpayers calculate the depreciation of an asset using a table which contains a percentage rate for each year of the property's recovery period. The yearly rate is applied to the cost of the asset. The cost of the property to which the rate is applied is not reduced for prior Years' depreciation. For 2018, taxpayers are allowed to elect to take a 50% bonus depreciation deduction for any specific class of equipment placed in to service. Any bonus depreciation taken must reduce the depreciable cost of the asset. The bonus depreciation rules allow taxpayers purchasing property with a MACRS recovery period of 20 years or computer software, and certain leasehold Improvements to directly write off a statutory percent of the cost of the assets in the year placed in service Under Section 179, taxpayers may elect to expense the acquisition cost of certain property, subject to certain limitations. This cost would otherwise have been deducted over a period of time using the regular cost recovery depreciation rules. The Section 179 deduction applies to both new and used property. b. Calculate the amount of depreciation for 2018 using the straight line depreciation election using MACRS tables over the minimum number of vars with no bonus depreciation or election to expense previous Next > Check My Work wolved and All work saved coloriment for ceramica 409 PM ^ 4 40 11/4/2019 Logitech RE w ry percent of the cost of the assets in the year placed in service ULLI builwale, and certain leasehold improvem Under Section 179, taxpayers may elect to expense the acquisition cost of certain property, subject to certain limitations. This cost would otherwise have been dedue of time using the regular cost recovery depreciation rules. The Section 179 deduction applies to both new and used property. b. Calculate the amount of depreciation for 2018 using the straight-line depreciation election, using MACRS tables over the minimum number of years with no bonus depre expense. 3,900 Feedback Check My Work Correct c. Calculate the amount of depreciation for 2018, including bonus depreciation but no election to expense, that Mike could deduct using the MACRS tables. 23400 X 5 Feedback 7 Check My Work Incorrect d. Assume no Income limit on the expense election calculate the amount of depreciation for 2018 including the election to expense but no bonus depreciation that Mike could dedi 5 39,000 Check My Work Previo All work saved, Email Instructor Save and Exit Submit Assie @^m na Logitech