Question

Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2018. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2018:

Asset	Cost		Date Placed in Service
Office furniture	$	150,000	02/03/2018
Machinery		1,560,000	07/22/2018
Used delivery truck*		40,000	08/17/2018

*Not considered a luxury automobile.

During 2018, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2019 to increase its production capacity. These are the assets acquired during 2019:

Asset	Cost		Date Placed in Service
Computers & info. system	$	400,000	03/31/2019
Luxury auto†		80,000	05/26/2019
Assembly equipment		1,200,000	08/15/2019
Storage building		700,000	11/13/2019

†Used 100% for business purposes.

Karane generated taxable income in 2019 of $1,732,500 for purposes of computing the §179 expense. (Use MACR)

Now assume that during 2019, Karane decides to buy a competitor’s assets for a purchase price of $1,350,000. Compute the maximum 2019 cost recovery, including §179 expense and bonus depreciation. Karane purchased the following assets for the lump-sum purchase price. (Round your final answers to the nearest whole dollar amount.)

Asset. Cost. Date Placed in ServiceInventory

Inventory	$	220,000	09/15/2019
Office furniture		230,000	09/15/2019
Machinery		250,000	09/15/2019
Patent		198,000	09/15/2019
Goodwill		2,000	09/15/2019
Building		430,000	09/15/2019
Land		20,000	09/15/2019

Description	COst	SEC. 179 Expense	Bonus	MACRS Basis	Current Marcs Depreciation	Total Depreciation Deduction
2018
Office furniture
Machinery
Used delivery truck
2019 Assets
Computers
Luxury Auto
Assembly Equipment
Storage Building
Inventory Office furniture Machinery Patent Goodwill Building Land
Total

Answer 1

Assuming that Karane decided to adopt the bonus depreciation 2019.

Description	Cost ($)	Sec.179 Expenses	Bonus	Marcs basis	Current MARCS Expenses	Total Expenses
Office Furniture	150,000	-	-	-	-	-
Machinery	1,560,000	-	-	195,000	47,756	47,756
Used Delivery Truck	40,000	-	-	15,000	4,800	4,800
Computers & info system	40,000	40,000	7,500	7,500	1,500	34,000
Luxury auto	80,000	-	8,000	72,000	3,160	11,160
Assembly equipment	1,200,000	1,200,000	-	-	-	1,200,000
Storage building	700,000	-	-	700,000	2,247	2,247
Total	3,770,000	500,000	15,500	989,500	59,463	1,299,963

2019 Depreciation deduction (including $179) $1,299,963.

Please find the work out:

9973

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