Question 1. Janie graduates from high school in 2010 and enrolls in college in the fall. Her parents pay $4,000 for her tuition and fees.
a. Assuming Janie's parents have AGI of $170,000, what is the American Opportunity credit they can claim for Janie?
b. Assuming Janie's parents have AGI of $75,000, what is the American Opportunity credit they can claim for Janie?
Question 2. Mike purchases a heavy-duty truck (5-year class recovery property) for his delivery service on April 30, 2010. The truck is not considered a passenger automobile for purposes of the listed property and luxury automobile limitations. The truck has a depreciable basis of $39,080 and an estimated useful life of 5 years. Its estimated salvage value is $1,080. Assume no election to expense is made and no bonus depreciation is taken.
a. Calculate the amount of depreciation for 2010 using financial accounting straight-line depreciation (not the straight-line MACRS election) over the truck's estimated useful life.
b. Calculate the amount of depreciation for 2010 using the straight-line depreciation election under MACRS over the minimum number of years.
c. Calculate the amount of accelerated depreciation for 2010 that Mike could deduct using MACRS.