Question

Burbank Corporation (calendar-year-end) acquired the following property this year: (Use MACRS Table 1, Table 2, and Exhibit 10-10.) (Round your answer to the nearest whole dollar amount.)

Asset	Placed in Service	Basis
Used copier	November 12	$	7,800
New computer equipment	June 6		14,000
Furniture	July 15		32,000
New delivery truck	October 28		19,000
Luxury auto	January 31		70,000
Total		$	142,800

Burbank acquired the copier in a tax-deferred transaction when the shareholder contributed the copier to the business in exchange for stock.

c. What is Burbank’s maximum cost recovery deduction this year assuming it elects §179 expense and claims bonus depreciation?

Answer 1

MACRS means modified Accelerated cost recovery system.

The company uses uses half year conversation to determine it's cost recovery.The cost recovery on luxury auto is limited to maximum is $10,000 for the year.

Assets	Cost	life times as per Macrs tables	Rate	depreciation
Used copier	7800	5 years	20%	1560
New computer equipment	14,000	5 years	20%	2800
FURNITURE	32,000	7 Years	14.29%	4572.8
New delivery truck	19,000	5 years	20%	3800
Luxury auto	70000	5 years	$10,000 per years	$10,000
Total depreciation		22,732.8