Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2021. In the process
Question:
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2021. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2021:
Asset | Cost | Date Placed in Service |
---|---|---|
Office furniture | $ 150,000 | 02/03/2021 |
Machinery | 1,560,000 | 07/22/2021 |
Used delivery truck* | 40,000 | 08/17/2021 |
*Not considered a luxury automobile.
During 2021, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2022 to increase its production capacity. These are the assets acquired during 2022:
Asset | Cost | Date Placed in Service |
---|---|---|
Computers and information system | $ 400,000 | 03/31/2022 |
Luxury auto* | 80,000 | 05/26/2022 |
Assembly equipment | 1,200,000 | 08/15/2022 |
Storage building | 700,000 | 11/13/2022 |
*Used 100% for business purposes.
Karane generated taxable income in 2022 of $1,732,500 for purposes of computing the §179 expense limitation.
Now assume that during 2022, Karane decides to buy a competitor's assets for a purchase price of $1,350,000.. Karane purchased the following assets for the lump-sum purchase price:
Asset | Cost | Date Placed in Service |
---|---|---|
Inventory | $ 220,000 | 09/15/2022 |
Office furniture | 230,000 | 09/15/2022 |
Machinery | 250,000 | 09/15/2022 |
Patent | 198,000 | 09/15/2022 |
Goodwill | 2,000 | 09/15/2022 |
Building | 430,000 | 09/15/2022 |
Land | 20,000 | 09/15/2022 |
Assume that Karane takes the maximum section 179 expense for the Assembly Equipment.
Required
Compute the maximum 2022 cost recovery, including §179 expense and bonus depreciation
Essentials Of Federal Taxation 2019
ISBN: 9781260190045
10th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver