Question

QUESTION 10 Chaz Corporation has taxable income in 2020 of 5312,000 for purposes of computing the 5179 expense and acquired the following assets during the year Basis $780.000 Asset Office furniture Computer equipment Delivery truck Qualified improvement property Total Placed in Service September 12 February 10 August 21 September 30 930,000 68,000 1.490.000 $3.268,000 What is the maximum total depreciation that Chazmay deduct in 20207 QUESTION 11 Acor Construction (calendar year end corporation has had rapid expansion during the last half of the current year due to the housing markets recovery. The company has $5.000.000 of taxable income before the cost recovery deduction and would like to maximize its cost recovery deduction for the current year. Acorn provided the following information Basis Assets New Equipment and Tools Used Light Duty Trucks Used Machinery Total Placed in Service August 20 October 17 November $1,750,000 1.500.000 525.000 $3.775.000 The used assets had been contributed to the business by its owner in a nontaxable transaction What is Acor max cost recovery expense in the current year

Answer 1

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Answer- 11

CALACULATION OF ACRON'S MAXIMUM COST RECOVERY EXPENSE IN THE CURRENT YEAR: Original Bonus Remaining MACRS Depreciation Asset Basis Depreciation Basis Rate Deduction New Equipment $1750000 $1750000 $0 14.29% SO and tools Used Light $1500000 $0 $1500000 20% $300000 duty trucks Used $525000 $0 $525000 14.29% $75023 Machinery Bonus $1750000 Depreciation Total $2125023.

- The total cost recovery deduction is the total depreciation deduction i.e., $2125023. - Acron construction company is eligible for 100% bonus depreciation on its newly purchased asset (new equipment and tools). - the company is not eligible for 100% bonus depreciation on its existing assets as they have been already taken and used by the company - And, Aircon company is not eligible for sec. 179 expense deduction as the newly purchased asset get into exist and the assets exceed the threshold limit of $2500000 by more than $1000000.