Two years ago, Bethesda Corporation bought a delivery truck for $30,000 (not subject to the luxury auto depreciation limits). Bethesda used MACRS 200 percent declining balance and the half-year convention to recover the cost of the truck, but it did not elect $179 expensing and opted out of bonus depreciation. Answer the questions for the following alternative scenarios. Use MACRS Table. (Do not round percentages used for calculations. Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) Required: a. Assuming Bethesda used the truck until it sold it in March of year 3, what depreciation expense can it claim on the truck for years 1 through 3? b. Assume that Bethesda claimed $18,500 of depreciation expense on the truck before it sold it in year 3. What are the amount and character of the gain or loss if Bethesda sold the truck in year 3 for $17,000 and incurred $2,000 of selling expenses on the sale? c. Assume that Bethesda claimed $18,500 of depreciation expense on the truck before it sold it in year 3. What are the amount and character of the gain or loss if Bethesda sold the truck in year 3 for $35,000 and incurred $3,000 of selling expenses on the sale? Complete this question by entering your answers in the tabs below. Reqa Reqb Reqc Assume that Bethesda claimed $18,500 of depreciation expense on the truck before it sold it in year 3. What are the amount and character of the gain or loss if Bethesda sold the truck in year 3 for $17,000 and incurred $2,000 of selling expenses on the sale? Table 1 MACRS Half-Year Convention 20-Year 3.750% Year 1 Year 2 7.219 6.677 Year 3 Year 4 Year 5 7.41 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 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 6.55 5.90 3.28 5.91 Year 6 6.177 5.713 5.285 4.888 4.522 4.462 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 Reg a Reqb Reqc Assuming Bethesda used the truck until it sold it in March of year 3, what depreciation expense can it claim on the truck for years 1 through 3? Year Depreciation 1 2 3 Req a Reqb Reqc Assume that Bethesda claimed $18,500 of depreciation expense on the truck before it sold it in year 3. What are the amount and character of the gain or loss if Bethesda sold the truck in year 3 for $17,000 and incurred $2,000 of selling expenses on the sale? Recognized Gain/(Loss) Character of recognized gain/loss): Ordinary Gain/(Loss) $1231 Gain/(Loss) Req a Reqb Reqc Assume that Bethesda claimed $18,500 of depreciation expense on the truck before it sold it in year 3. What are the amount and character of the gain or loss if Bethesda sold the truck in year 3 for $35,000 and incurred $3,000 of selling expenses on the sale? Recognized Gain/(Loss) Character of recognized gain/(loss): Ordinary Gain/(Loss) $1231 Gain/(Loss)
