Facts: The Tepper Company, a calendar year taxpayer, began doing business on 1/1/16. Tepper is in the business of providing data analysis services (it is NOT a manufacturer). During 2016, Tepper acquired the following assets and capitalized the following expenses:
Description Date Placed in Service Initial Basis
Start-up Costs 1/1/16 $53,000
Office Furniture 1/1/16 75,000
Computer Hardware 2/1/16 10,000
Calculators 2/1/16 5,000
Copy Machines 2/1/16 12,000
Land 6/13/16 300,000
Building 6/13/16 450,000
Paving 10/15/16 100,000
Office Fixtures 11/1/16 80,000
On 4/1/2016, Tepper acquired the assets of Fessler, Co (one of Tepper's competitors) and allocated basis to the following assets:
Description Date Placed in Service Initial Basis
Computer Hardware 4/1/16 490,000
Computer Software (see below) 4/1/16 685,000
Office Communications Equipment 4/1/16 30,000
Office furniture & Fixtures 4/1/16 150,000
Goodwill 4/1/16 90,000
$200,000 of the acquired computer software was off the shelf purchased by the competitor at Best Buy. The remaining $485,000 of the computer software was specially developed for Fessler's use by paid consultants.
For 2016, Tepper reported taxable income of $5 million prior to taking into account Code section 179, depreciation or amortization.
For 2016: Assume that Tepper will make a Code §179 election for the full amount allowed for 2016 and will make the appropriate amortization elections.
REQUIRED:
1. Compute Tepper's 2016 cost recovery deductions related to the assets listed (showing calculations for each asset)
2. All projects must be submitted in Excel and, where computations are required, Excel must be used to make them (i.e., do not use Excel as WORD). There should be separate tabs as follows:
- Lead - Summarizes the 179/depreciation/amortization deductions
- 179 Tab: Analyzes 179 and computes the 179 deduction
- Bonus Tab: Analyzes bonus depreciation and computes it
- MACRS Tab: Provides MACRS depreciation computations
- Other: Provides computation for other cost recovery (e.g., amortization and non-MACRS property)