Question

Karane Enterprises, a calendar year manufacturer based in College Station, Texas, began business in 2017. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2017:

Assets    Cost Date   Placed in Service

Office furniture 150,000 2/3/17

Machinery 1,560,000 7/22/17

Used delivery truck 40,000 8/17/17

During 2017, Karane was very successful (and had no 179 limitation) and decided to acquire more assets this next year to increase its production capacity. These are the assets acquired during 2018:

Assets                    Cost Date    Placed in Service

Computers & info syst 400,000 3/31/18

Luxury auto 80,000 5/26/18

Assembly equip 1,200,000 8/15/18

Storage bldg. 700,000 11/13/18

Karane generated taxable income in 2018 of $1,732,500 for purposes of computing the 179 expense.

Required:

Assume that during 2018 Karane decides to buy a compeittors assets for a purchase price of $1,350,000. Compute the maximum 2018 cost recovery including 179 expense and bonus depreciation. Karane purchsaed the following assets for the lump-sum purchase price.

Asset                            Cost                   Date Placed in Service

Inventory      220,000            9/15/18

Office furniture            230,000             9/15/18

Machinery                 250,000                9/15/18

Patent                       198,000                9/15/18

Goodwill                    2,000                   9/15/18

Building                     430,000              9/15/18

Land                           20,000                9/15/18

Note: Show calculations

Answer 1