At the beginning of its 2018 tax year, Hiram owned the following business assets
ID: 2342686 • Letter: A
Question
At the beginning of its 2018 tax year, Hiram owned the following business assets:
On July 8, Hiram sold its equipment. On August 18, it purchased and placed in service new tools costing $589,000; these tools are three-year recovery property. These were Hiram’s only capital transactions for the year. Compute Hiram’s maximum cost recovery deduction for 2018. In making your computation, assume that taxable income before depreciation exceeds $1,000,000.
THERE IS NO CALCULATION FOR TOOLS AS U SEE.
Date Placedin Service Initial
Cost Accumulated
Depreciation Recovery
Period Depreciation
Convention Furniture 6/19/16 $30,750 $11,925 7-year Half-year Equipment 5/2/15 70,000 49,840 5-year Half-year Machinery 9/30/15 58,000 41,296 5-year Half-year 8 At the beginning of its 2018 tax year, Hiram owned the following business assets: Date Placed Initial Accumulated Recovery Depreciation in Service 6 points Furniture Equipment Machinery 6/19/16 5/2/15 9/30/15 Cost $30,750 70,000 58,000 Depreciation Period Convention 7-year Half-year 5-year Half-year 5-year Half-year $11,925 49,840 41,296 eBook Print References On July 8, Hiram sold its equipment. On August 18, it purchased and placed in service new tools costing $589,000; these tools are three-year recovery property. These were Hiram's only capital transactions for the year. Compute Hiram's maximum cost recovery deduction for 2018. In making your computation, assume that taxable income before depreciation exceeds $1,000,000. Use Table 7-2. (Enter all amounts as positive values. Round your intermediate computations and final answers to the nearest whole dollar amount.) 2018 MACRS Depreciation Furniture Equipment Machinery Total MACRS Depreciation Section 179/bonus on new tools Total 2018 cost recovery
Explanation / Answer
Solution:-
= 30,750 * 17.49%
=$5,378.175
= 70,000 * 11.52%
= $8,064
= 58,000 * 11.52%
= $6,681.6
= 6,681.6 + 8,064 + 5,378.175
= $20,123.335
= 589,000 * 33.33%
= $196,313.7
= 196,313.7 + $20,123.335
= $216,437.03
= $216,437
Initial cost 2018 MACRS Depreciation Amount Furniture $30,750 17.49%= 30,750 * 17.49%
=$5,378.175
Equipment $70,000 11.52%= 70,000 * 11.52%
= $8,064
Machinery $58,000 11.52%= 58,000 * 11.52%
= $6,681.6
Total MACRS depreciation= 6,681.6 + 8,064 + 5,378.175
= $20,123.335
New tools $589,000 33.33%= 589,000 * 33.33%
= $196,313.7
Cost recovery deduction for 2018= 196,313.7 + $20,123.335
= $216,437.03
= $216,437
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.