Bobby’s marginal tax rate has been low for several years because his sole proprietorship has had low profits. Therefore, he has not elected Sec. 179 expensing, elected out of bonus depreciation, and elected to use the alternative depreciation system for property acquisitions. Bobby acquires, holds, or sells the following assets in 2022:

Assume the half-year convention applies for each year.
a. What is the depreciation deduction for each asset in 2022?
b. What amount of gain or loss does Bobby recognize on the properties sold in 2022?

Transcribed Image Text:

Equipment Light duty truck (Business-use) Furniture Automobile Date Acquired Date Sold Cost Basis Price 6/1/22 5/1/18 12/1/22 Recovery Original Selling Depreciation Period Method (Years) 3/1/18 7/1/19 12/1/22 $40,000 - 30,000 $8,000 10,000 12,000 - 10,000 SL ADS SL ADS SL ADS SL ADS 75 7 5