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:

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:

Karane generated taxable income in 2022 of $1,732,500 for purposes of computing the §179 expense limitation.
a) 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 $1,350,000. Compute the maximum 2022 cost recovery, including §179 expense and bonus depreciation. Karane purchased the following assets for the lump-sum purchase price:

e) Complete Part I of Form 4562 for part (b) (use the most current form available).

Transcribed Image Text:

Asset Office furniture Machinery Used delivery truck Cost $ 150,000 1,560,000 40,000 Date Placed in Service 02/03/2021 07/22/2021 08/17/2021