Question

You will need to use Excel for this question. (The information is enough!)

Explain your answer as necessary and be sure your calculations are clearly shown.

Taxpayer Tina, a sole proprietor, has the following business assets:

Warehouse, acquired in 2005 for $1,000,000; Machinery, (2016, $370,000); Computers (2018, $25,000); Pickup truck (2019, $55,000). Costs given are net of any Sec. 179 or bonus depreciation taken.

Required:

1. Compute Tina’s MACRS depreciation for 2020.
2. Independent of your answer to (a), assume that Tina sells the computers at a loss of $5,000, and 10% of the machinery at a gain of $17,000. Determine the character of the gain and loss on her return, explaining in detail.

Answer 1