SECTION 5 (15 points) Answer the question on the space provided below. Show wor
ID: 2587668 • Letter: S
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SECTION 5 (15 points) Answer the question on the space provided below. Show wor be to determine and award credit. If your writing is illegibl follow how you derived your answer-no credit will be awarded. You will need to consult the depreciation tables in your tex partial credit. The more organized and neat your work, the eari cannot wil e easier it will textbook t answer this question. In 2017, Dr. Edwin Jenner, a virologist, acquires the following assets to be used in his virology research business Cost Placed In Service March 28, 2017 April 1, 2017 June 20, 2017 October 1, 2017 December 2, 2017 Asset Office Furniture& fixtures Computers & peripheral equipment Office supplies (paper, ink, etc.) Medical equipment 14-yr old horse (Buttons) used for medical experiments $ 28,000 35,000 1.400 400,000 6,000 Dr. Jenner's taxable income from his business would not create a limitation for purposes of the $179 deduction. Dr. Jenner does not want to take additional first-year depreciation (if available). Determine Dr. Jenner's cost recovery deduction under MACRS for each qualified asset and the total cost recovery deduction for 2017Explanation / Answer
Cost Recovery period Depn Rate (Ist Year) Depreciation Office Furniture 28,000 7 Years 14.29% 4,001 Compuer & Peripheral equipment 35,000 5 Years 20% 7,000 Medical Equipment 400,000 7 Years 14.29% 57,160 Buttons for medical experiments 6,000 5 Years 20% 1,200 Total cost of the recovery 69,361 Office Supplies 1,400 Not an fixed assets, valuation at the end of the year Net realisable value or cost price whichever is lower Depreciation will be charged 100% even if it is purchased on 30th December 2017 5-year property includes: *Automobiles. *Light general purpose trucks. *Typewriters, calculators, copiers, and duplicating equipment. *Any semi-conductor manufacturing equipment. *Any computer or peripheral equipment. *Any section 1245 property used in connection with research and experimentation. *Certain energy property specified in section 168(e)(3)(B)(vi). *Appliances, carpets, furniture, etc., used in a rental real estate activity. 7-year property includes: *Office furniture and equipment. *Railroad track. *Any motorsports entertainment complex (as defined in section 168(i)(15)) placed in service before January 1, 2008. *Any property that does not have a class life and is not otherwise classified.
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