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- In March 2019, Helen Carlon acquired used equipment for her business at a cost of 300,000. The equipment is five-year property for regular tax depreciation purposes. a. If Helen depreciates the equipment using the method that will produce the greatest deduction for 2019 for regular income tax purposes, what is the amount of the AMT adjustment? b. Draft a letter to Helen regarding the choice of depreciation methods. Helens address is 500 Monticello Avenue, Glendale, AZ 85306.Alice purchases a rental house on August 22,2019, for a cost of $174,000. Of this amount, $100,000 is considered to be allocable to the cost of the home, with the remaining $74,000 allocable to the cost of the land. What is Alice's maximum depreciation deduction for 2019 using MACRS? $2,373 $1,970 $1,364 $1,061 $1,009In 2019, Mary sells for $24,000 a machine used in her business. The machine was purchased on May 1,2017, at a cost of $22,000. Mary has deducted depreciation on the machine of $6,000. What is the amount and nature of Mary's gain as a result of the sale of the machine? $2,000 Section 1231 gain $8,000 ordinary income under Section 1245 $6,000 ordinary income and $2,000 Section 1231 gain $6,000 Section 1231 gain and $2,000 ordinary income under Section 1245 None of the above
- At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial reporting purposes, the asset has a 4-year life with no residual value and is depreciated by the straight-line method beginning in 2019. For tax purposes, the asset is depreciated under MACRS using a 5-year recovery period. Prior to 2019, Conley had no deferred tax liability or asset. The difference between depreciation for financial reporting purposes and income tax purposes is the only temporary difference between pretax financial income and taxable income. The current income tax rate is 30%, and no change in the tax rate has been enacted for future years. In 2019 and 2020, taxable income will be higher or lower than financial income by what amount?A taxpayer places a $1,090,000 5-year recovery period asset in service in 2022. This is the only asset placed in service in 2022. Assuming half-year convention, an election to expense under Section 179, and no income limitation, what is the amount of total cost recovery deduction (no bonus depreciation)?A taxpayer places a $50,000 5-year recovery period asset (not an auto) in service in 2021. This is the only asset placed in service in 2021. Assuming half-year convention, bonus depreciation, and taxable income before cost recovery of $5,000, what is the amount of cost recovery in 2021? a.$5,000 b.$25,000 c.$30,000 d.$0 e.$50,000
- During 2018, Basil Company purchases equipment (7-year property) for $100,000 and decides to take a Sec. 179 deduction. a. Compute maximum tax depreciation for the machinery for 2018-2025.On April 1, 2024, Titan Corporation purchases office equipment for $75,000. For tax reporting, the company uses MACRS and classifies the equipment as five-year personal property. In 2024, this type of equipment is eligible for 60% first-year bonus depreciation. For financial reporting, the company uses straight-line depreciation. Assume the equipment has no residual value. Required: 1. Calculate annual depreciation for the five-year life of the equipment according to MACRS. The company uses the half-year convention for tax reporting purposes. 2. Calculate annual depreciation for the five-year life of the equipment according to straight-line depreciation. The company uses partial-year depreciation based on the number of months the asset is in service for financial reporting purposes. 3. In which year(s) is tax depreciation greater than financial reporting depreciation? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate annual…A company acquired an asset for $1,200,000 in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 19%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: Asset's Cost Useful life Enacted tax rate Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income Required: Cumulative Temporary Difference Deferred Tax Liability Jan. 1, 2024 $1,200,000 $0 0 4 years 19% 2024 $3,700,000 300,000 (399,960) $3,600,040 2025 $4,100,000 300,000 (533,400) $3,866,600 For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. Each cell requires a formula, even if the result is $0. 2026 $4,400,000 300,000…
- On April 1, 2024, Titan Corporation purchases office equipment for $74,000. For tax reporting, the company uses MACRS and classifies the equipment as 5-year personal property. In 2024, this type of equipment is eligible for 60% first-year bonus depreciation. For financial reporting, the company uses straight-line depreciation. Assume the equipment has no residual value. Required: Calculate annual depreciation for the five-year life of the equipment according to MACRS. The company uses the half-year convention for tax reporting purposes. Calculate annual depreciation for the five-year life of the equipment according to straight-line depreciation. The company uses partial-year depreciation based on the number of months the asset is in service for financial reporting purposes. In which year(s) is tax depreciation greater than financial reporting depreciation 2. Year Depreciation 2024 2025 2026 2027 2028 2029 Total $0 1. Year Depreciation Basis…A taxpayer places a $50,000 5-year recovery period asset in service in 2020. This is the only asset placed in service in 2020. Assuming half-year convention, no immediate expensing, what is the amount of bonus depreciation? a.$50,000 b.$10,000 c.$25,000 d.$0 e.None of these choices are correct.