jonathon purchased a group of assets for use in his business on may 1, 2017. the

Question

jonathon purchased a group of assets for use in his business on may 1, 2017. the assets had been appraised at the following values- land 50,000 commercial building 100,000, machinery and equipment 80,000, office equipment 30,000 and a delivery van 10,000. the total purchase price was 250,000.

a. compute the initial tax basis for each asset. show your work.

b. using the tax basis figures determined above, compute the 2017 tax depreciation for each asset (ignoring bonus depreciation and section 179 expensing- show your work.)

Explanation / Answer

APPRAISAL RATIO VALUE BASIS LAND 50000 5 250000*5/27 46296 BUILDING 100000 10 250000*10/27 92593 MACHINERY 80000 8 250000*8/27 74074 OFFICE EQUIPMENT 30000 3 250000*3/27 27778 VAN 10000 1 250000*1/27 9259 270000 27 250000

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