Full file at https://testbankuniv.eu/Taxation-of-Business-Entities-2016-Edition-7th-Edition-Spilker-Solutions-Manual
Solutions Manual – McGraw-Hill’s Taxation, by Spilker et al. Delivery Truck (5 year) Leasehold improvements (15 year)*
$93,000 $380,000
250,000
$93,000
20.00%
$130,000
3.33%
$18,600
$4,333 $500,000 §179 Expense Total Depreciation Expense $568,371 *The leasehold improvements are 15-year property and must be depreciated using the half-year convention (§168(d)(1) and the straight-line method (§168(e)(3)(E)(iv)). 60. (LO2, LO3) Chaz Corporation has taxable income in 2015 of $312,000 before the §179 expense and acquired the following assets during the year: Placed in Service September 12 February 10 August 21
Asset Office furniture Computer Equipment Delivery Truck Total
Basis $1,280,000 930,000 68,000 $2,278,000
What is the maximum total depreciation expense that Chaz may deduct in 2015 (assume that the 2014 §179 limits and bonus depreciation are extended to 2015)? The maximum depreciation expense is $1,425,394 determined as follows: Description
Amount
(1) Property placed in service (2) Threshold for §179 phase-out (3) Phase-out of maximum §179 expense (4) Maximum 179 expense before phase-out (5) Phase-out of maximum §179 expense Maximum §179 expense after phase-out
Explanation
$2,278,000 Total of qualifying assets (2,000,000) 2015 amount [§179(b)(2)] $278,000 (1) – (2) (permanently disallowed) $500,000 2015 amount [§179(b)(1)] 278,000 From (3) $ 222,000 (4) – (5), not limited by taxable income
Chaz will receive the most benefit by applying the §179 amount to the furniture (7year property. Asset Furniture (7-year) Computers (5- year) Delivery Truck (5 year)
Original Basis
§179 Expense
Remaining Basis
Bonus Depreciation
Remaining Basis
$1,280,000
$222,000
$1,058,000
529,000
$529,000
14.29%
$75,594
930,000
930,000
465,000
465,000
20.00%
93,000
68,000
68,000
34,000
34,000
20.00%
6,800
Rate
Depreciation Expense
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Full file at https://testbankuniv.eu/Taxation-of-Business-Entities-2016-Edition-7th-Edition-Spilker-Solutions-Manual