Use MACRS for depreciation and fill out the tables below:
Assume there is no Section 179 and bonus depreciation. Use MACRS only for depreciation. Andrea owns a small company that producing facial masks. Thanks to COVID-19, her business was booming at the beginning of 2020. But by end of 2020, since the need for facial masks is no longer there, Andrea decided to close her business. The first step to close her business involve selling off business assets. Below are her assets transaction info Assets Cost Sold date Sold price 15k Delivery car Furniture Equipment Warehouse Land Purchased Date 7/1/20 2/14/19 2/1/19 1/1/19 1/1/19 25k 20k 100k 50k 12/31/20 12/31/20 12/31/20 12/31/20 12/31/20 10k 20k 55k 200k 150k a) Calculate total accumulative depreciation of each asset until the sold date (12/31/20). Hint: Review Class 15 material b) Calculate the Adjusted basis for each asset c) Calculate the Gain/Loss Recognized for each asset. d) Point out the exact character of gain/loss for each asset gain/loss (ex: Ordinary, pure 1231, 1245, 1250, etc.) e) Calculate the Net 1231 Gain/Loss Hint: Be aware of 1245 Depreciation recapture and 1231 lookback rules f) Characterize the gain from the whole 5 transactions into 2 categories: Total Ordinary Gain & Total LTCG Hint: For a ->d: Fill in the following tables: Assets Cost Depreciation Depreciation Acc. Total Adjusted Depreciation Basis year 1 year 2 Delivery car Furniture Equipment Warehouse Land Purchased Date 7/1/20 2/14/19 2/1/19 1/1/19 1/1/19 25k 20k 100k 50k 150k Assets Sold date Sold price Characters Adjusted basis Gain/Loss recognized Delivery car Furniture Equipment Warehouse Land 12/31/20 12/31/20 12/31/20 12/31/20 12/31/20 15k 10k 20k 55k 200k Assume there is no Section 179 and bonus depreciation. Use MACRS only for depreciation. Andrea owns a small company that producing facial masks. Thanks to COVID-19, her business was booming at the beginning of 2020. But by end of 2020, since the need for facial masks is no longer there, Andrea decided to close her business. The first step to close her business involve selling off business assets. Below are her assets transaction info Assets Cost Sold date Sold price 15k Delivery car Furniture Equipment Warehouse Land Purchased Date 7/1/20 2/14/19 2/1/19 1/1/19 1/1/19 25k 20k 100k 50k 12/31/20 12/31/20 12/31/20 12/31/20 12/31/20 10k 20k 55k 200k 150k a) Calculate total accumulative depreciation of each asset until the sold date (12/31/20). Hint: Review Class 15 material b) Calculate the Adjusted basis for each asset c) Calculate the Gain/Loss Recognized for each asset. d) Point out the exact character of gain/loss for each asset gain/loss (ex: Ordinary, pure 1231, 1245, 1250, etc.) e) Calculate the Net 1231 Gain/Loss Hint: Be aware of 1245 Depreciation recapture and 1231 lookback rules f) Characterize the gain from the whole 5 transactions into 2 categories: Total Ordinary Gain & Total LTCG Hint: For a ->d: Fill in the following tables: Assets Cost Depreciation Depreciation Acc. Total Adjusted Depreciation Basis year 1 year 2 Delivery car Furniture Equipment Warehouse Land Purchased Date 7/1/20 2/14/19 2/1/19 1/1/19 1/1/19 25k 20k 100k 50k 150k Assets Sold date Sold price Characters Adjusted basis Gain/Loss recognized Delivery car Furniture Equipment Warehouse Land 12/31/20 12/31/20 12/31/20 12/31/20 12/31/20 15k 10k 20k 55k 200k
