Terra Corporation, a calendar-year taxpayer, purchases and places into service machinery with a 7-year life that costs $1,380,000 on April 27, 2022. It was placed in service early in the year and was the only addition this year. Terra elects to depreciate the maximum under Sec. 179 and does not apply bonus depreciation. Terra's taxable income for the year before the Sec. 179 deduction is $1,700,000. What is Terra's total depreciation deduction related to this property?

Terra Corporation, a calendar-year taxpayer, purchases and places into service machinery with a 7-year life that costs $1,380,000 on April 27, 2022. It was placed in service early in the year and was the only addition this year. Terra elects to depreciate the maximum under Sec. 179 and does not apply bonus depreciation. Terra's taxable income for the year before the Sec. 179 deduction is $1,700,000. What is Terra's total depreciation deduction related to this property?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 26P

See similar textbooks

Similar questions

At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial reporting purposes, the asset has a 4-year life with no residual value and is depreciated by the straight-line method beginning in 2019. For tax purposes, the asset is depreciated under MACRS using a 5-year recovery period. Prior to 2019, Conley had no deferred tax liability or asset. The difference between depreciation for financial reporting purposes and income tax purposes is the only temporary difference between pretax financial income and taxable income. The current income tax rate is 30%, and no change in the tax rate has been enacted for future years. In 2019 and 2020, taxable income will be higher or lower than financial income by what amount?
Ironwood Corporation has ordinary taxable income of $65,000 in 2019, and a short-term capital loss of $15,000. What is the corporation's tax liability for 2019? $7,500 $5,250 $10,500 $13,650 None of the above
Patterson Corporation uses the calendar year as its tax year. It acquires and places into service two depreciable assets during 2023: Asset #1: 7-year property; $980,000 cost; placed into service on January 20. Asset # 2: 5-year property; $440,000 cost; placed into service on August 1. View the MACRS half-year convention rates Read the requirements. Calculate Patterson's depreciation deductions for 2023. (Use MACRS rates to two decimal places, XXX%. Round the MACRS depreciation to the nearest dollar.) 2023 Depreciation Asset # 1 Asset #2 Total depreciation Patterson Corporation uses the calendar year as its tax year. It acquires and places into service two depreciable assets during 2023: Asset #1: 7-year property: $980,000 cost, placed into service on January 20. Asset #2: 5-year property: $440,000 cost; placed into service on August 1. View the MACRS half-year convention rates Read the requirements. . • Calculate Patterson's depreciation deductions for 2023. (Use MACRS rates to two…
Sunland Corporation follows IFRS. Prior to 2022, the accounting income and taxable income for Sunland were the same. On January 1, 2022, the company purchased equipment at a cost of $1,224,000. For accounting purposes, the equipment was to be depreciated over six years using the straight-line method and no residual value. For income tax purposes, the equipment was subject to a CCA rate of 30% and was eligible for the Accelerated Investment Incentive (1.5 times the CCA rate applies for 2022). Sunland's income before tax for accounting purposes for 2023 was $13,000,000. The company was subject to a 20% income tax rate for all applicable years and anticipated profitable years for the foreseeable future. (a) Calculate the amount of the temporary difference for equipment and net change in deferred tax asset/liability. LA Net change in deferred tax asset/liability $
Sharp Corporation purchased qualified business property in 2023 and placed it in service immediately. The equipment cost $450,000. Sharp does not claim section 179 deduction, which provision would allow Sherp Corporation to deduct 80% of the cost of the equitment on the 2023 tax return?
Ayres Services acquired an asset for $200 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: 2021 $405 $425 ($ in millions) 2022 2023 2024 $440 Pretax accounting income Depreciation on the income statement Depreciation on the tax return $475 50 50 50 50 (64) (84) (30) (22) Taxable income $391 $391 $460 $503 Required: For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "O" wherever applicable. Enter your answers in millions rounded to 2 decimal place (i.e., 5,500,000 should be entered as 5.50).) Beginning of End of 2021 End of End of End…
Ayres Services acquired an asset for $128 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset’s cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: ($ in millions) 2021 2022 2023 2024 Pretax accounting income $ 360 $ 380 $ 395 $ 430 Depreciation on the income statement 32 32 32 32 Depreciation on the tax return (55 ) (39 ) (21 ) (13 ) Taxable income $ 337 $ 373 $ 406 $ 449 Required:For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions…
Prior to 2019, the accounting income and taxable income for Sheffield Corporation were the same. On January 1, 2019, the company purchased equipment at a cost of $1,116,000. For accounting purposes, the equipment was to be depreciated over six years using the straight-line method and no residual value. For income tax purposes, the equipment was subject to a CCA rate of 30% (half-year rule applies for 2019). Sheffield's income before tax for accounting purposes for 2020 was $13,000,000. The company was subject to a 20% income tax rate for all applicable years and anticipated profitable years for the foreseeable future. Sheffield follows IFRS. Calculate taxable income and taxes payable for 2020. Taxable income Income taxes payable $ eTextbook and Media List of Accounts %24 %24
Ayres Services acquired an asset for $168 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset’s cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: ($ in millions) 2021 2022 2023 2024 Pretax accounting income $ 385 $ 405 $ 420 $ 455 Depreciation on the income statement 42 42 42 42 Depreciation on the tax return (60 ) (64 ) (26 ) (18 ) Taxable income $ 367 $ 383 $ 436 $ 479 Required:For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. Beginning of 2021 End of 2021 End of 2022 End of 2023 End of 2024 Cumulative…
Ayres Services acquired an asset for $96 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2021. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: ($ in millions) 2021 2022 2023 2024 Pretax accounting income $ 480 $ 500 $ 515 $ 550 Depreciation on the income statement 24 24 24 24 Depreciation on the tax return (96 ) (0 ) (0 ) (0 ) Taxable income $ 408 $ 524 $ 539 $ 574 Required:For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Enter your answers…
Woolard Supplies (a sole proprietorship) has taxable income in 2021 of $300,000 before any depreciation deductions (Section 179, bonus, or MACRS) and placed some office furniture into service during the year. The furniture does not qualify for bonus depreciation. Asset Placed in Service Basis Office furniture (used) June 5 $1,300,000 If Woolard elects the maximum amount of Section 179 for the year: a. What is the amount of MACRS depreciation expense for the year? b. What is the amount of deductible Section 179 expense for the year? c. What is Woolard's Section 179 carryforward amount to next year, if any?
Ayres Services acquired an asset for $96 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2021. The enacted tax rate is 25% Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income 2021 $380 24 (96) Cumulative Temporary Difference Deferred Tax Liability $308 ($ in millions) 2023 2024 2022 $400 24 (0) (0) $415 $450 24 24 (0) $424 $439 $474 Required: For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should…