Diana purchases an office building for $1,000,000, office equipment for $500,000 and computer equipment for $300,000. The assets are placed in service on September 15, 2020 and Diana does not elect section 179 or use bonus depreciation. Calculate the total depreciation deduction that Diana may take on her 2020 tax return. Asset Date placed in Service Recovery Period Original Basis Rate Depreciation Furniture & Fixtures 9/15/2020 7 yrs 800000 0.1429 114320 Commercial Office Building 9/15/2020 39 yrs 24610 100000 0.2461

Diana purchases an office building for $1,000,000, office equipment for $500,000 and computer equipment for $300,000. The assets are placed in service on September 15, 2020 and Diana does not elect section 179 or use bonus depreciation. Calculate the total depreciation deduction that Diana may take on her 2020 tax return. Asset Date placed in Service Recovery Period Original Basis Rate Depreciation Furniture & Fixtures 9/15/2020 7 yrs 800000 0.1429 114320 Commercial Office Building 9/15/2020 39 yrs 24610 100000 0.2461

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter8: Depreciation And Sale Of Business Property

Section: Chapter Questions

Problem 4MCQ: James purchased office equipment for his business. The equipment has a depreciable basis of $7,000...

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James purchased office equipment for his business. The equipment has a depreciable basis of $7,000 and was put in service on June 1,2019. James decides to elect straightline depreciation under MACRS for the asset over the minimum number of years (7 years), and does not use bonus depreciation or make the election to expense. What is the amount of his depreciation deduction for the equipment for the 2019 tax year? $2,000 $1,000 $500 $0 None of the above
In March 2019, Helen Carlon acquired used equipment for her business at a cost of 300,000. The equipment is five-year property for regular tax depreciation purposes. a. If Helen depreciates the equipment using the method that will produce the greatest deduction for 2019 for regular income tax purposes, what is the amount of the AMT adjustment? b. Draft a letter to Helen regarding the choice of depreciation methods. Helens address is 500 Monticello Avenue, Glendale, AZ 85306.
On July 20,2019, Kelli purchases office equipment at a cost of $12,000. Kelli elects out of bonus depreciation but makes the election to expense for 2019. She is selfemployed as an attorney, and, in 2019, her business has a net income of $6,000 before considering this election to expense. Kelli has no other income or expenses for the year. What is the maximum amount that Kelli may deduct for 2019 under the election to expense, assuming she elects to expense the entire $12,000 purchase? $24,000 $12,000 $6,000 $3,000 $1,000
On June 30, 2019, Kelly sold property for 240,000 cash and a 960,000 note due on September 30, 2020. The note will also pay 6% interest, which is slightly higher than the Federal rate. Kellys cost of the property was 400,000. She is concerned that Congress may increase the tax rate that will apply when the note is collected. Kellys after-tax rate of return on investments is 6%. a. What can Kelly do to avoid the expected higher tax rate? b. Assuming that Kellys marginal combined Federal and state tax rate is 25% in 2019, how much would the tax rates need to increase to make the option identified in part (a) advisable?
Alice purchases a rental house on August 22,2019, for a cost of $174,000. Of this amount, $100,000 is considered to be allocable to the cost of the home, with the remaining $74,000 allocable to the cost of the land. What is Alice's maximum depreciation deduction for 2019 using MACRS? $2,373 $1,970 $1,364 $1,061 $1,009