TABLE 4 Nonresidential Real Property Mid-Month Convention Straight Line31.5 Years (for assets placed in service before May 13, 1993) Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 3 Month 6 Month 7 Month 8 Month 9 Year 1 3.042% 2.778% 2.513% 2.249% 1.984% 1.720% 1.455% 1.190% 0.926% Year 2-7 3.175 3.173 3.175 3.175 3.175 3.175 3.175 3.175 3.173 Year 8 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.175 Year 9 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 10 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 11 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 12 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 13 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 14 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 15 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 16 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 17 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 18 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 19 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 20 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 21 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 22 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 23 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.115 3.174 Year 24 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 25 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 26 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 27 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 28 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 29 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 30 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 31 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 32 1.720 1.984 2.249 2.513 2.778 3.042 3.175 3.174 3.175 Year 33 0.132 0.397 0.661 Month 10 0.661% 3.175 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 0.926 Month 11 0.397% 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 1.190 Month 12 0.132% 3.175 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 1.455 TABLE 5 Nonresidential Real Property Mid-Month Convention Straight Line39 Years (for assets placed in service on or after May 13, 1993) Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Year 1 2.461% 2.247% 2.033% 1.819% 1.605% 1.391% 1.177% 0.963% 0.749% Year 2-39 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 Year 40 0.107 0.321 0.535 0.749 0.963 1.177 1.391 1.605 1.819 Month 10 0.535% 2.564 2.033 Month 11 0.321% 2.564 2.247 Month 12 0.107% 2.564 2.461 EXHIBIT 10-10 Automobile Depreciation Limits Recovery Year Placed in Service Year 2021+ 2020 2019 2018 1 10,100** 10.100** 10.100** 10,000** 2 16,100 16,100 16.100 16,000 3 9,700 9,700 9,700 9,600 4 and after 5.760 5,760 5,760 5.760 * As of press date, the IRS had not released the 2021 limitations for automobiles, so throughout the chapter we use the same limitations as in 2020 for 2021. **58,000 additional depreciation is allowed when bonus depreciation is claimed (5168(k) (2) (F)] Required Information [The following information applies to the questions displayed below.] Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2020. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2020: Date Placed in Asset Cost Service Office furniture $ 150,eee 02/03/2020 Machinery 1,560, e 07/22/2020 Used delivery truck 40,000 88/17/2020 *Not considered a luxury automobile. During 2020, Karane was very successful and had no 5179 limitations) and decided to acquire more assets in 2021 to increase its production capacity. These are the assets acquired during 2021: Date Placed in Asset Cost Service Computers and information system $ 480, eee 03/31/2021 Luxury autot 80, eee 5/26/2e21 Assembly equipment 1,280, Bee 08/15/2821 Storage building 780, eee 11/13/2021 tUsed 100% for business purposes. Karane generated taxable income in 2021 of $1.732,500 for purposes of computing the $179 expense limitation. (Use MACRS Table 1. Table 2. Table 3. Table 4. Table 5, and Exhibit 10-10. (Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.) Required: b. Compute the maximum 2021 depreciation deductions, including $179 expense (ignoring bonus depreciation). Description Cost Section 179 Expense MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction s $ 0 S $ 150,000 1,560,000 40.000 150,000 40,000 12,800 1,050,000 0 ol 1,082,800 0 2020 Assets Office furniture Machinery Used delivery truck 2021 Assets Computers and Information System Luxury Auto Assembly Equipment Storage Building Total 0 0 0 400.000 80.000 1.200,000 700,000 4,130,000 0 1,000,000 1,000,000 0 0 2,050,000 $ $ $ 190,000 $ 12,800 $ 2,062,800 Required Information [The following information applies to the questions displayed below.] Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2020. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2020: Date Placed in Asset Cost Service Office furniture $ 150,00 22/03/2020 Machinery 1,560,000 07/22/2020 Used delivery truck 40,000 88/17/2020 *Not considered a luxury automobile. During 2020, Karane was very successful and had no 5179 limitations) and decided to acquire more assets in 2021 to increase its production capacity. These are the assets acquired during 2021: Date Placed in Asset Cost Service Computers and information system $ 480,eee 23/31/2021 Luxury autot 80,000 5/26/2021 Assembly equipment 1,290, eee 08/15/2821 Storage building 780, eee 11/13/2021 fused 100% for business purposes. Karane generated taxable income in 2021 of $1732,500 for purposes of computing the $179 expense limitation. (Use MACRS Table 1. Table 2. Table 3. Table 4. Table 5, and Exhibit 10-10. (Leave no answer blank. Enter zero If applicable. Input all the values as positive numbers.) Required: c. Compute the maximum 2021 depreciation deductions, including $179 expense, but now assume that karane would like to take bonus depreciation. Description Cost Section 179 Expense Bonus MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction s s 0 150.000 1,560,000 40.000 0 0 2020 Assets Office Furniture Machinery Used Delivery Truck 2021 Assets Computers and Information System Luxury Auto Assembly Equipment Storage Building Total 0 400.000 80.000 1,200,000 OOOOO 0 700,000 4,130,000 s $ 0 s 0 S 0 s 0 s [The following information applies to the questions displayed below.] Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2020. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2020: Date Placed in Asset Cost Service Office furniture $ 158,888 02/03/2020 Machinery 1,560,eee 07/22/2020 Used delivery truck 48,eee BB/17/2020 "Not considered a luxury automobile. During 2020, Karane was very successful (and had no 5179 limitations and decided to acquire more assets in 2021 to Increase its production capacity. These are the assets acquired during 2021: Date Placed in Asset Cost Service Computers and information system $ 480,880 03/31/2021 Luxury autot 88,888 e5/26/2821 Assembly equipment 1,280, cee 28/15/2821 Storage building 788,888 11/13/2021 tUsed 100% for business purposes. Karane generated taxable income in 2021 of $1,732.500 for purposes of computing the $179 expense limitation. (Use MACRS Table 1. Table 2. Table 3. Table 4. Table 5. and Exhibit 10-10.) (Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.) Required: d. Now assume that during 2021, Karane decides to buy a competitor's assets for a purchase price of $1.350.000. Compute the maximum 2021 cost recovery. Including $179 expense and bonus depreciation. Karane purchased the following assets for the lump- sum purchase price: (Round your final answers to the nearest whole dollar amount.) Asset Inventory Office furniture Machinery Patent Goodwill Building Land Cost $ 220,00 230,000 250,880 198,888 2,080 430,ce 28,888 Date Placed in Service 29/15/2021 29/15/2021 09/15/2021 29/15/2021 29/15/2021 e9/15/2021 29/15/2021 Assume that Karane takes the maximum section 179 expense for the Assembly Equipment. Description Cost Section 179 Expense Bonus MACRS Basis Current MACRS Depreciation Current Amortization Total Cost Recovery Deduction S 0 0 0 0 0 0 2020 Assets Office Furniture Machinery Used Delivery Truck 2021 Assets Computers and Information System Luxury Auto Assembly Equipment Storage Building Inventory Office Furniture Machinery Patent Goodwill Building Land Totals 0 0 0 0 0 0 0 0 0 S 0$ 0 $ S 0$ 0 S Table 1 MACRS Half-Year Convention 20-Year 3.750% 7.219 Year 1 Year 2 Year 3 Year 4 Year 5 Depreciation Rate for Recovery Period 3-Year 5-Year 7-Year 10-Year 15-Year 33.33% 20.00% 14.29% 10.00% 5.00% 44.45 32.00 24.49 18.00 9.50 14.81 19.20 17.49 14.40 8.55 7.41 11.52 12.49 11.52 7.70 11.52 8.93 9.22 6.93 5.76 8.92 7.37 6.23 8.93 6.55 5.90 4.46 6.55 5.90 6.56 5.91 6.677 6.177 5.713 Year 6 5.285 4.888 4.522 4.462 6.55 5.90 3.28 5.91 5.90 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 4.461 4.462 4.461 4.462 4.461 4.462 5.91 5.90 5.91 2.95 4.461 4.462 4.461 4.462 4.461 2.231 TABLE - MACRS Mid-Quarter Convention: for property placed in service during the first quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 35.00% 25.00% Year 2 26.00 21.43 Year 3 15.60 15.31 Year 4 11.01 10.93 Year 5 11.01 8.75 Year 6 1.38 8.74 Year 7 8.75 Year 8 1.09 TABLE 26 MACRS Mid-Quarter Convention: For property placed in service during the second quarter Depreciation Rate for Recovery Period Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 5-Year 25.00% 30.00 18.00 11.37 11.37 4.26 7-Year 17.85% 23.47 16.76 11.97 8.87 8.87 8.87 3.34 TABLE 2 MACRS Mid-Quarter Convention: For property placed in service during the third quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 15.00% 10.71% Year 2 34.00 25.51 Year 3 20.40 18.22 Year 4 12.24 13.02 Year 5 11.30 9.30 Year 6 7.06 8.85 Year 7 8.86 Year 8 5.53 TABLE 20 MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 5.00% 3.57% Year 2 38.00 27.55 Year 3 22.80 19.68 Year 4 13.68 14.06 Year 5 10.94 10.04 Year 6 9.58 8.73 Year 7 8.73 Year 8 7.64 TABLE 3 Residential Rental Property Mid-Month Convention Straight Line27.5 Years Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Year 1 3.485% 3.182% 2.879% 2.576% 2.273% 1.970% 1.667% Year 2-9 3.636 3.636 3.636 3.636 3.636 3.636 3.636 Year 10 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 11 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 12 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 13 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 14 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 15 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 16 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 17 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 18 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 19 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 20 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 21 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 22 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 23 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 24 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 26 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 26 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 27 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 28 1.97 2.273 2.576 2.879 3.182 3.485 3.636 Year 29 0.152 Month 8 1.364% 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 0.455 Month 9 Month 10 Month 11 Month 12 1.061% 0.758% 0.455% 0.152% 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 0.758 1.061 1.364 1.667 TABLE 4 Nonresidential Real Property Mid-Month Convention Straight Line31.5 Years (for assets placed in service before May 13, 1993) Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 3 Month 6 Month 7 Month 8 Month 9 Year 1 3.042% 2.778% 2.513% 2.249% 1.984% 1.720% 1.455% 1.190% 0.926% Year 2-7 3.175 3.173 3.175 3.175 3.175 3.175 3.175 3.175 3.173 Year 8 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.175 Year 9 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 10 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 11 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 12 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 13 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 14 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 15 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 16 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 17 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 18 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 19 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 20 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 21 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 22 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 23 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.115 3.174 Year 24 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 25 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 26 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 27 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 28 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 29 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 30 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 Year 31 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 Year 32 1.720 1.984 2.249 2.513 2.778 3.042 3.175 3.174 3.175 Year 33 0.132 0.397 0.661 Month 10 0.661% 3.175 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 0.926 Month 11 0.397% 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 1.190 Month 12 0.132% 3.175 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 1.455 TABLE 5 Nonresidential Real Property Mid-Month Convention Straight Line39 Years (for assets placed in service on or after May 13, 1993) Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Year 1 2.461% 2.247% 2.033% 1.819% 1.605% 1.391% 1.177% 0.963% 0.749% Year 2-39 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 Year 40 0.107 0.321 0.535 0.749 0.963 1.177 1.391 1.605 1.819 Month 10 0.535% 2.564 2.033 Month 11 0.321% 2.564 2.247 Month 12 0.107% 2.564 2.461 EXHIBIT 10-10 Automobile Depreciation Limits Recovery Year Placed in Service Year 2021+ 2020 2019 2018 1 10,100** 10.100** 10.100** 10,000** 2 16,100 16,100 16.100 16,000 3 9,700 9,700 9,700 9,600 4 and after 5.760 5,760 5,760 5.760 * As of press date, the IRS had not released the 2021 limitations for automobiles, so throughout the chapter we use the same limitations as in 2020 for 2021. **58,000 additional depreciation is allowed when bonus depreciation is claimed (5168(k) (2) (F)] Required Information [The following information applies to the questions displayed below.] Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2020. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2020: Date Placed in Asset Cost Service Office furniture $ 150,eee 02/03/2020 Machinery 1,560, e 07/22/2020 Used delivery truck 40,000 88/17/2020 *Not considered a luxury automobile. During 2020, Karane was very successful and had no 5179 limitations) and decided to acquire more assets in 2021 to increase its production capacity. These are the assets acquired during 2021: Date Placed in Asset Cost Service Computers and information system $ 480, eee 03/31/2021 Luxury autot 80, eee 5/26/2e21 Assembly equipment 1,280, Bee 08/15/2821 Storage building 780, eee 11/13/2021 tUsed 100% for business purposes. Karane generated taxable income in 2021 of $1.732,500 for purposes of computing the $179 expense limitation. (Use MACRS Table 1. Table 2. Table 3. Table 4. Table 5, and Exhibit 10-10. (Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.) Required: b. Compute the maximum 2021 depreciation deductions, including $179 expense (ignoring bonus depreciation). Description Cost Section 179 Expense MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction s $ 0 S $ 150,000 1,560,000 40.000 150,000 40,000 12,800 1,050,000 0 ol 1,082,800 0 2020 Assets Office furniture Machinery Used delivery truck 2021 Assets Computers and Information System Luxury Auto Assembly Equipment Storage Building Total 0 0 0 400.000 80.000 1.200,000 700,000 4,130,000 0 1,000,000 1,000,000 0 0 2,050,000 $ $ $ 190,000 $ 12,800 $ 2,062,800 Required Information [The following information applies to the questions displayed below.] Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2020. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2020: Date Placed in Asset Cost Service Office furniture $ 150,00 22/03/2020 Machinery 1,560,000 07/22/2020 Used delivery truck 40,000 88/17/2020 *Not considered a luxury automobile. During 2020, Karane was very successful and had no 5179 limitations) and decided to acquire more assets in 2021 to increase its production capacity. These are the assets acquired during 2021: Date Placed in Asset Cost Service Computers and information system $ 480,eee 23/31/2021 Luxury autot 80,000 5/26/2021 Assembly equipment 1,290, eee 08/15/2821 Storage building 780, eee 11/13/2021 fused 100% for business purposes. Karane generated taxable income in 2021 of $1732,500 for purposes of computing the $179 expense limitation. (Use MACRS Table 1. Table 2. Table 3. Table 4. Table 5, and Exhibit 10-10. (Leave no answer blank. Enter zero If applicable. Input all the values as positive numbers.) Required: c. Compute the maximum 2021 depreciation deductions, including $179 expense, but now assume that karane would like to take bonus depreciation. Description Cost Section 179 Expense Bonus MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction s s 0 150.000 1,560,000 40.000 0 0 2020 Assets Office Furniture Machinery Used Delivery Truck 2021 Assets Computers and Information System Luxury Auto Assembly Equipment Storage Building Total 0 400.000 80.000 1,200,000 OOOOO 0 700,000 4,130,000 s $ 0 s 0 S 0 s 0 s [The following information applies to the questions displayed below.] Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2020. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2020: Date Placed in Asset Cost Service Office furniture $ 158,888 02/03/2020 Machinery 1,560,eee 07/22/2020 Used delivery truck 48,eee BB/17/2020 "Not considered a luxury automobile. During 2020, Karane was very successful (and had no 5179 limitations and decided to acquire more assets in 2021 to Increase its production capacity. These are the assets acquired during 2021: Date Placed in Asset Cost Service Computers and information system $ 480,880 03/31/2021 Luxury autot 88,888 e5/26/2821 Assembly equipment 1,280, cee 28/15/2821 Storage building 788,888 11/13/2021 tUsed 100% for business purposes. Karane generated taxable income in 2021 of $1,732.500 for purposes of computing the $179 expense limitation. (Use MACRS Table 1. Table 2. Table 3. Table 4. Table 5. and Exhibit 10-10.) (Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.) Required: d. Now assume that during 2021, Karane decides to buy a competitor's assets for a purchase price of $1.350.000. Compute the maximum 2021 cost recovery. Including $179 expense and bonus depreciation. Karane purchased the following assets for the lump- sum purchase price: (Round your final answers to the nearest whole dollar amount.) Asset Inventory Office furniture Machinery Patent Goodwill Building Land Cost $ 220,00 230,000 250,880 198,888 2,080 430,ce 28,888 Date Placed in Service 29/15/2021 29/15/2021 09/15/2021 29/15/2021 29/15/2021 e9/15/2021 29/15/2021 Assume that Karane takes the maximum section 179 expense for the Assembly Equipment. Description Cost Section 179 Expense Bonus MACRS Basis Current MACRS Depreciation Current Amortization Total Cost Recovery Deduction S 0 0 0 0 0 0 2020 Assets Office Furniture Machinery Used Delivery Truck 2021 Assets Computers and Information System Luxury Auto Assembly Equipment Storage Building Inventory Office Furniture Machinery Patent Goodwill Building Land Totals 0 0 0 0 0 0 0 0 0 S 0$ 0 $ S 0$ 0 S Table 1 MACRS Half-Year Convention 20-Year 3.750% 7.219 Year 1 Year 2 Year 3 Year 4 Year 5 Depreciation Rate for Recovery Period 3-Year 5-Year 7-Year 10-Year 15-Year 33.33% 20.00% 14.29% 10.00% 5.00% 44.45 32.00 24.49 18.00 9.50 14.81 19.20 17.49 14.40 8.55 7.41 11.52 12.49 11.52 7.70 11.52 8.93 9.22 6.93 5.76 8.92 7.37 6.23 8.93 6.55 5.90 4.46 6.55 5.90 6.56 5.91 6.677 6.177 5.713 Year 6 5.285 4.888 4.522 4.462 6.55 5.90 3.28 5.91 5.90 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 4.461 4.462 4.461 4.462 4.461 4.462 5.91 5.90 5.91 2.95 4.461 4.462 4.461 4.462 4.461 2.231 TABLE - MACRS Mid-Quarter Convention: for property placed in service during the first quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 35.00% 25.00% Year 2 26.00 21.43 Year 3 15.60 15.31 Year 4 11.01 10.93 Year 5 11.01 8.75 Year 6 1.38 8.74 Year 7 8.75 Year 8 1.09 TABLE 26 MACRS Mid-Quarter Convention: For property placed in service during the second quarter Depreciation Rate for Recovery Period Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 5-Year 25.00% 30.00 18.00 11.37 11.37 4.26 7-Year 17.85% 23.47 16.76 11.97 8.87 8.87 8.87 3.34 TABLE 2 MACRS Mid-Quarter Convention: For property placed in service during the third quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 15.00% 10.71% Year 2 34.00 25.51 Year 3 20.40 18.22 Year 4 12.24 13.02 Year 5 11.30 9.30 Year 6 7.06 8.85 Year 7 8.86 Year 8 5.53 TABLE 20 MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 5.00% 3.57% Year 2 38.00 27.55 Year 3 22.80 19.68 Year 4 13.68 14.06 Year 5 10.94 10.04 Year 6 9.58 8.73 Year 7 8.73 Year 8 7.64 TABLE 3 Residential Rental Property Mid-Month Convention Straight Line27.5 Years Month Property Placed in Service Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Year 1 3.485% 3.182% 2.879% 2.576% 2.273% 1.970% 1.667% Year 2-9 3.636 3.636 3.636 3.636 3.636 3.636 3.636 Year 10 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 11 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 12 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 13 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 14 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 15 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 16 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 17 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 18 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 19 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 20 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 21 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 22 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 23 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 24 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 26 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 26 3.637 3.637 3.637 3.637 3.637 3.637 3.636 Year 27 3.636 3.636 3.636 3.636 3.636 3.636 3.637 Year 28 1.97 2.273 2.576 2.879 3.182 3.485 3.636 Year 29 0.152 Month 8 1.364% 3.636 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 3.637 3.636 0.455 Month 9 Month 10 Month 11 Month 12 1.061% 0.758% 0.455% 0.152% 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.636 3.636 3.636 3.636 0.758 1.061 1.364 1.667