Compute MACRS allowable for Oak Co. for its tax returns for 2015, 2016, 2017 and
ID: 2509301 • Letter: C
Question
Compute MACRS allowable for Oak Co. for its tax returns for 2015, 2016, 2017 and 2018.
All items were placed in service when purchased unless stated otherwise.
In February 2015 Oak purchased five Office desks (five year items) cost 40,000 each. Because Oak made very little money in 2015 the accountants decided it would be best to decline all special write-offs in 2015.
In December 2017 Oak moved to a smaller office and put two of the desks out for garbage pick-up.
On January 5, 2016 Oak purchased six fork lifts (five year items) for $100,000 each. On August 28, 2016 Oak purchased a widget (ten year item) for 350,000.
On March 28, 2017 Oak purchased another fork lift, $100,000. On November 20, 2017 Oak purchased a used super widget (also ten years) for $750,000.
Section 179 and special first year apply unless declined.
Explanation / Answer
As per the section 179 first year would apply for deduction during this period.
As per the section deuction claim as per the rules which is given in defination. Any property which is placed in service means it is purchase which is ready and available for specific use in tax period
2015 The deduction limit for 2016 is $500,000
2015 Maximum Limit on Capital Purchases$2,000,000
2015 The deduction limit for 2016 is $500,000
2016 Maximum Limit on Capital Purchases$2,000,000
2017 Maximum Section 179 Deduction limit - $510,000
2017 Maximum Purcahse Limit - $2,030,000
2018 Deduction Limit = $1,000,000 (one million dollars)
2018 Spending Cap on equipment purchases = $2,500,000
In February 2015 Oak purchased five Office desks (five year items) cost 40,000 each. Because Oak made very little money in 2015 the accountants decided it would be best to decline all special write-offs in 2015.
total desks = 5*40000= $200000
total deduction this year 2015 =$200000
On January 5, 2016 Oak purchased six fork lifts (five year items) for $100,000 each. On August 28, 2016 Oak purchased a widget (ten year item) for 350,000.
total deduction this year 2016 = $100000
In December 2017 Oak moved to a smaller office and put two of the desks out for garbage pick-up.
On March 28, 2017 Oak purchased another fork lift, $100,000. On November 20, 2017 Oak purchased a used super widget (also ten years) for $750,000.
total purchase = $850000.00
total deduction = $500000+bonus depreciation deduction $175000+normal first year 350000=$710000
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