1. Explain how the 179 immediate expensing deduction affects the computation of MARCS cost recovery

2. Diana acquires, for $65000, and place in service a 5-year class asset on December 19, 2020. It is the only asset that Diana acquires during 2020. Diana does not elect immediate expensing under 179. The elects additional first-year depreciation. Calculate Diana's total cost recovery deduction for 2020 .

3. On April 5, 2020, Kinsey places in service a new automobile that cost $60,000. He does not elect

179 expensing, and he elects not to take any available additional first-year depreciation. The car is

used 70% for business and 30% for personal use in each tax year.

Kinsey chooses the MACRS 200% declining-balance method of cost recovery (the auto is a 5-year

asset). Assume the following luxury automobile limitations: year 1: $10,100; year 2: $16,100.

Compute the total depreciation allowed for 2020 and 2021.

4. On August 2, 2020, Wendy purchased a new office building for $3,800,000. On October 1, 2020,

she began to rent out office space in the building. On July 15, 2024, Wendy sold the office building.

a. Determine Wendy's cost recovery deduction for 2020.

b. Determine Wendy's cost recovery deduction for 2024.

5. Olga is the proprietor of a small business. In 2020, the business's income, before consideration of any cost recovery or $ 179 deduction, is $250,000. Olga spends $620,000 on new 7-year class assets and elects to take the 179 deduction on them. She does not claim any available additional first-year depreciation. Olga's cost recovery deduction for 2020, except for the cost recovery with respect to the new 7-year assets, is $95,000. Determine Olga's total cost recovery for 2020 with respect to the 7-year class assets and the amount of any 179 carry forward.