Focus: whether to make a straight election rather than claim 100% Bonus on a new addition Facts: Kelly White is a single taxpayer. She owns an S Corporation that generates taxable income of $636, 150. This is reported on line 1 of the Sch K of the 1120S. She takes all of the income as her distributable share. The S Corporation does not pay her salary. Nor does she claim itemized deductions. In 2021 her business makes a significant asset acquisition that has cost basis of $500,000. The asset has a 5-year life for tax purposes. Question 1If Kelly claims 100% Bonus depreciation what will taxable income be for 2021 (year 1)? How much tax does Bonus save in year 1? Question 2assume Kelly has the same taxable income results in years 2 through 6. How much tax does she pay in total for years 1 through 6? Question 3Kellys CPA would like to evaluate whether a straight-line election is preferable versus the 100% Bonus. Kelly needs to model out tax depreciation for years 1 through 6 with years 1 and 6 applying the mid-year convention. a. How much depreciation does Kelly claim in years 1 and 6? b. How much depreciation does Kelly claim in years 2,3,4, and 5? c. How much tax does Kelly pay in each of the 6 years and what is the total tax? Question 4-compare your answers for the two choices considering total taxes paid and use a PV assumption of 3%. What would you recommend? Notes: 1. use 2021 rates and standard deduction for all years. 2. ignore any Self-employment taxes and the high wage surtax.