FINANCIAL ACCOUNTING
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ISBN: 9781259964947
Author: Libby
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In 2021, Ben purchases and places in service a new auto for his business. The auto costs $57,000 and will be used 60 percent for business. Assuming the half-year convention applies and Ben elects out of bonus
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- TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter TABLE 26 MACRS Mid-Quarter Convention: For property placed in service during the second quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 25.00% 17.85% Year 2 30.00 23.47 Year 3 18.00 16.76 Year 4 11.37 11.97 Year 5 1137 8.87 Year 6 4.26 8.87 Year 7 8.87 Year 8 3.34 TABLE 2e MACRS Mid-Quarter Convention: For property placed in service during the third quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 15.00% 10.71% Year 2 34.00 25.51 Year 3 20.40 18.22 Year 4 12.24 13.02 Year 5 1130 9.30 Year 6 7.06 8.85 Year 7 8.86 Year 8 5.53 TABLE 2d MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 5.00% 357% Year 2 38.00 27.55 Year 3 22.80 19.68 Year 4 13.68 14.06 Year 5 10.94 10.04 Year 6 9.58 8.73arrow_forwardIn 2019, Clem and Chloe, a married couple, sold their principal residence that they have owned and occupied for the past twenty years. The adjusted basis for the residence is $324,000. How much gain must they recognize if the residence was sold for $904,000?arrow_forwardLincoln purchases nonresidential real property costing $300,000 and places it in service in March 2021. He elects Section 179 for all qualifying assets, but elects out of bonus depreciation. What is Lincoln's 2023 depreciation on the nonresidential real property? A) $6,099 B) $7,692 C) $8,637 D) $0arrow_forward
- Please help me with the following question. During 2018, William purchases the following capital assets for use in his catering business: New passenger automobile (September 30) $51,500 Baking equipment (June 30) 6,500 Assume that William decides to use the election to expense on the baking equipment (and has adequate taxable income to cover the deduction) but not on the automobile (which has a 5-year recovery period), and he also uses the MACRS accelerated method to calculate depreciation but elects out of bonus depreciation. Click here to access the depreciation table and click here to access the annual automobile depreciation limitations. Calculate William's maximum depreciation deduction for 2018, assuming he uses the automobile 100 percent in his business.arrow_forwardGreg Grove pays $50,000 interest in 2020 on his mortgage on his principal residence. It has an interest rate of 4 percent and balance of $1,250,000 during the year. He took out the mortgage in 2019. How much of this interest is deductible on Greg’s tax return for 2020? show your workarrow_forwardOn July 20, 2022, Mary purchased a passenger automobile that is used 75% for business. The automobile cost $60,000. If she does not elect section 179 and bonus depreciation, what is the depreciation on the automobile for 2022?arrow_forward
- Sid bought a new $1,320,000 seven-year class asset on August 2, 2020 On December 2, 2020, he purchased $800,000 of used five-year class assets. If Sid elects § 179 and does not take additional first-year depreciation, what is the maximum cost recovery deduction for these purchases for 2020?arrow_forwardMyka purchased a new office desk for her consulting business. She paid $3,300 on March 17, 2021, and immediately placed it into service. Myka wants to take a 50% Section 179 expense deduction, and opt out of bonus depreciation. Myka will use the 200% declining balance method and the half-year convention. How much is her 2021 depreciation deduction? $0 $236 $289 $404arrow_forwardOn July 17, 2019, TP purchases office furniture (7-year property) costing $50,000 for use in her business. She wishes to use the Section 179 election but does not elect to use bonus depreciation. Her taxable income before the Section 179 depreciation deduction is $25,000. What is the maximum total cost recovery deduction TP can take for the current year?arrow_forward
- Brian acquired a rental house in 2003 for a cost of $80,000. Straight-line depreciation on the property of $26,000 has been claimed by Brian. In January 2019, he sells the property for $120,000, receiving $20,000 cash on March 1 and the buyer's note for $100,000 at 10 percent interest. The note is payable at $10,000 per year for 10 years, with the first payment to be received 1 year after the date of sale. Calculate his taxable gain under the installment method for the year of sale of the rental house. In your computations, round any division to two decimal places. Gain reportable in 2019 is $.arrow_forwardLina purchased a new car for use in her business during 2021. The auto was the only business asset she purchased during the year, and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2021 and 2022 (Lina doesn’t want to take bonus depreciation for 2021 or 2022) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1, Table 2, and Exhibit 10-10.) The vehicle cost $30,800, and business use is 100 percent (ignore §179 expense).arrow_forwardOn July 17, 2019, Ari purchases office furniture (7-year property) costing $50,000 for use in her business. She wishes to use the Section 179 election but does not elect to use bonus depreciation. Her taxable income before the Section 179 depreciation deduction is $25,000. What is the maximum total cost recovery deduction Ari can take for the current year?arrow_forward
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