Q1) Dain's Diamond Bit Drilling purchased the following assets this year.
Asset Purchase Date Original Basis
Drill bits (5-year) February 23 $ 95,000
Drill bits (5-year) July 20 99,000
Commercial building June 20 315,000
Assume its taxable income for the year was $59,500 before deducting any §179 expense (assume no bonus depreciation). (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)
a. What is Dain's maximum §179 expense for the year? ( i knew this but the other questions are wrong with me) please help
b. What is Dain's maximum depreciation expense for the year (including §179 expense)?
C. If the February drill bits' original basis was $2,382,500, what is Dain's maximum §179 expense for the year?
d. If the February drill bits' basis was $2,502,500, what is Dain's maximum §179 expense for the year?
Q2) Woolard Inc. has taxable income in 2014 of $150,000 before any depreciation deductions (§179, bonus, or MACRS) and acquired the following assets during the year: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
Asset Placed in Service Basis
Office furniture (used) March 20 $ 625,000
a. If Woolard elects $50,000 of §179, what is Woolard's total depreciation deduction for the year?
b. If Woolard elects the maximum amount of §179 for the year, what is the amount of deductible §179 expense for the year? What is the total depreciation expense that Woolard may deduct in 2014?
c. Woolard is concerned about future limitations on its §179 expense. How much §179 expense should Woolard expense this year if it wants to maximize its depreciation this year and avoid any carryover to future years?
Q3) Nicole organized a new corporation. The corporation began business on April 1 of year 1. She made the following expenditures associated with getting the corporation started:
Expense Date Amount
Attorney fees for articles of incorporation February 10 $ 39,500
March 1 - March 30 wages March 30 6,250
March 1 - March 30 rent March 30 2,750
Stock issuance costs April 1 26,000
April 1 - May 30 wages May 30 15,625
a. What is the total amount of the start-up costs:answer is: $9000 but what's the organizational expenditures for Nicole's corporation?
b. What amount of the start-up costs: answer is $5000. what's organizational expenditures may the corporation immediately expense in year 1?
c. What amount can the corporation deduct as amortization expense for the organizational expenditures and for the start-up costs for year 1 (not including the amount it immediately expensed)? (Round intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.)
Q4) Chaz Corporation has taxable income in 2014 of $352,000 before the §179 expense and acquired the following assets during the year:
Asset Placed in Service Basis
Office furniture September 12 $1,230,000
Computer equipment February 10 926,000
Delivery truck August 21 63,000
Total $2,219,000
What is the maximum total depreciation expense that Chaz may deduct in 2014?
Q5) Convers Corporation (June 30 year-end) acquired the following assets during the current tax year (ignore §179 expense and bonus depreciation for this problem):
Asset Placed in Service Date Original Basis
Machinery December 23 $ 75,000
Computer equipment January 5 15,500
Used delivery truck* January 23 43,750
Furniture June 2 205,000
Total $ 339,250
What is the allowable MACRS depreciation on Convers' property in the current year?