Question

Chaz Corporation has taxable income in 2018 of $312,000 for purposes of computing the §179 expense and acquired the following assets during the year:

Asset		Placed in Service	Basis
Office furniture		September 12	$780,000
Computer equipment		February 10	930,000
Delivery truck		August 21	68,000
Qualified improvement property		September 30	1,520,000
Total			$3,298,000

What is the maximum total depreciation that Chaz may deduct in 2018?

Acorn Construction (calendar-year end C-corporation) has had rapid expansion during the last half of the current year due to the housing market’s recovery. The company has $5,000,000 of taxable income before the cost recovery deduction and would like to maximize its cost recovery deduction for the current year. Acorn provided the following information:

Assets	Placed in Service	Basis
New Equipment and Tools	August 20	$1,650,000
Used Light Duty Trucks	January 17	1,500,000
Used Machinery	February 6	525,000
Total		$3,675,000

The used assets had been contributed to the business by its owner in a nontaxable transaction. What is Acorn’s maximum cost recovery expense in the current year?

Answer 1

Chaz corporation will get depreciation at full rate on office furniture ,delivery truck and qualified improvement property as it has been used for more than 180days where as on computer equipment half depreciation shall allowed because it has been used for less then 180days.

Similarly

Acorn construction get half depreciation for used light duty truck and used machinery because it has been used for less then 180days. And will get full depreciation on new equipment and tools as it has been used for more then 180days.

Both Chaz corporation and Acorn construction will not eligible for additional depreciation as they are not manufacturing firms.

Depreciation calculated and rates are given below: