1. In June 2015, LeBron bought a Hummer (heavy suv) for $82,500 to be used 75 pe

Question

1. In June 2015, LeBron bought a Hummer (heavy suv) for $82,500 to be used 75 percent in his business. What is the maximum amount that he can deduct in 2015, including both Section 179 expensing and MACRS depreciation? Assume bonus depreciation is not available.

2. Ace Corporation bought a new computer system for his business on may 12, 2015 for $15,000. The system included computer hardware and built in software valued at $3000. The corporation has never separated computer software in prior years. How muchay it deduct for the computer system in 2015 and how much is die to the software?

3. On Nov 1, 2015, Hayden Corp, a calendar year taxpayer, purchased an apartment building for $1,500,000, of which $300,000 was allocate to the land. It also purchased furniture (7 yr) for $35,000 and computer equipment (5 yr) for $15,000 on the same date, which were it's only purchases of depreciate personal property during 2015. Compute Hayden allowable depreciation for the apartment building, furniture, and computer equipment both for the year of purchase 2015, and the year of sale 2017 assuming 179 expensing and bonus depreciation are NOT available.

4. On Aug 15, 2015, Larry, who is single and owns and operates a construction company, paid $42,500 for a new car that he uses 65 percent for business and 35 for personal use. He purchased no other business assets in 2015. What is the maximum allowable depreciation he can deduct in 2015 for the car assuming bonus depreciation is not available abd first year expensing is not elected?

Explanation / Answer

Question 1. Value of the Hammer 82500 Business use @75% 61875 Section 179 deduction 25000 Normal Depreciation for 2015(61875-25000)/5 x 7/12 4302 Maximum Depreciation deductable 29302 Question 2. Value of Computer system 15000 Less: inbuilt software 3000 Cost of compouter 12000 Value of computer of $ 12000 can be deducted under section 179. Depreciation on software can be charged for 8 month = (3000/5)/12 x 8 = 400 Question 3. Depreciation for 2 month Normal depreciation on furniture 833.3333 =(35000/7year) x2/12 Depreciation on computer 500 =(15000/5year) x2/12 Depreciation on Building 7272.727 =(1,200,000/27.5year) x2/12 question 4. Value of Car 42500 Business use @65% 27625 Maximum Depreciation undersection 179 25000 Normal Depreciation (27625-25000)/5 525 total allowable depreciation 25525

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