Back in Boston, Steve has been busy creating and managing his new company, Teton Mountaineering (TM), which is based out of a small town in Wyoming.

In the process of doing so, TM has acquired various types of assets. Below is a list of assets acquired during 2015:

Asset Cost Date Placed in Service Office furniture $ 10,000 02/03/2015 Machinery 560,000 07/22/2015 Used delivery truck* 15,000 08/17/2015

*Not considered a luxury automobile, thus not subject to the luxury automobile limitations.

During 2015, TM had huge success (and had no §179 limitations) and Steve acquired more assets the next year to increase its production capacity. These are the assets acquired during 2016:

Asset Cost Date Placed in Service Computers & info. system $ 40,000 03/31/2016 Luxury auto† 80,000 05/26/2016 Assembly equipment 475,000 08/15/2016 Storage building 400,000 11/13/2016

†Used 100% for business purposes.

TM generated a taxable income in 2016 before any §179 expense of $732,500.
Required

a) Compute the maximum 2015 depreciation deductions including §179 expense (ignoring bonus depreciation).

b) Compute the maximum 2016 depreciation deductions including §179 expense (ignoring bonus depreciation).

c) Compute the maximum 2016 depreciation deductions including §179 expense, but now assume that Steve would like to take bonus depreciation.

d) Ignoring part (c), now assume that during 2016, Steve decides to buy a competitor’s assets for a purchase price of $350,000. Compute the maximum 2016 cost recovery including §179 expense (ignoring bonus depreciation).
Steve purchased the following assets for the lump-sum purchase price.
Asset Cost Date Placed in Service Inventory $ 20,000 09/15/2016 Office furniture 30,000 09/15/2016 Machinery 50,000 09/15/2016 Patent 98,000 09/15/2016 Goodwill 2,000 09/15/2016 Building 130,000 09/15/2016 Land 20,000 09/15/2016 Complete Part I of Form 4562 for part

(b) (use the most current form available).