[The following information applies to the questions displayed below.] Dain’s Diamond Bit Drilling purchased the following...

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[The following information applies to the questions displayed below.] Dain’s Diamond Bit Drilling purchased the following...

[The following information applies to the questions displayed below.]

Dain’s Diamond Bit Drilling purchased the following assets this year.

	Purchase	Original
Asset	Date	Basis
Drill bits (5-year)	Jan-13	$	130,500
Drill bits (5-year)	Sep-01		149,750
Commercial building	May-27		234,000

Assume its taxable income for the year was $61,500 for purposes of computing the §179 expense (assume no bonus depreciation). (Use MACRS Table 1, Table 2, Table 3, Table 4and Table 5.) (Leave no answer blank. Enter zero if applicable.)

b. What is Dain’s maximum depreciation deduction for the year (including §179 expense)? (Round your intermediate calculations to the nearest whole dollar amount

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Answer 1

Answer #1

Answer b.

Asset	Original Basis	Sec 179 Expense	Remaining Basis	Rate	Dep. Exp.
Drill Bits (5 Years)	130500	61500	69000	20.000%	13800
Drill Bits (5 Years)	149750		149750	20.000%	29950
Commercial Building	234000		234000	1.819%	4256
Sec 179 Expense					61500
Total Depreciation Expense					109506

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Answer 2

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