On March 20, 2019, Javier Sanchez purchased and placed in service a new 7-year class asset...

 
 
 

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On March 20, 2019, Javier Sanchez purchased and placed in service a new 7-year class asset costing $450,800 for use in his landscaping business, which he operates as a single member LLC (Sanchez Landscaping LLC). Rather than using bonus depreciation, Javier would like to use § 179 to expense $200,000 of this asset and then use regular MACRS to cost recover the remaining cost. During 2018, his business generated a net income of $540,960 before any § 179 immediate expense election. If required round your intermediate computations and final answers to the nearest dollar. Click here to access the depreciation table to use for this problem. a. Determine the cost recovery deductions (including first year additional depreciation) that Javier Sanchez can claim with respect to this asset in 2019 and 2020. Total cost recovery deduction in 2019: $ Total cost recovery deduction in 2020: $ b. Complete Javier's Form 4562 (page 1) for 2019. Note: For 2019, the maximum § 179 is $1,020,000 and the threshold amount is $2,550,000, If an amount is zero, enter "0". Enter amounts as positive numbers. OMB No. 1545-0172 4562 Depreciation and Amortization Form 2019 (Including Information on Listed Property) Department of the Treasury • Attach to your tax return. Attachment Internal Revenue Service (99) >Information about Form 4562 and its separate instructions is at www.irs.gov/form4562. Sequence No. 179 Name(s) shown on return Business or activity to which this form relates Identifying number Note: If you have any listed property, complete Part V before you complete Part I. 1 Maximum amount (see instructions).. 1,020,000 Total cost of section 179 property placed in service (see instructions) 2 450,800 3 Threshold cost of section 179 property before reduction in limitation (see instructions) 3 2,550,000V 4 Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter -0- . . 4 5 Dollar limitation for tax year. Subtract line 4 from line 1. If zero or less, enter -0-. If married filing separately, see instructions 1,020,000 5 (b) Cost (business use (a) Description of property (c) Elected cost only) Incorrect Landscaping equipment 450,800 v Listed property. Enter the amount from line 29 7 8 Total elected cost of section 179 property. Add amounts in column (c), lines 6 and 7 9 Tentative deduction. Enter the smaller of line 5 or line 8 10 Carryover of disallowed deduction from line 13 of your 2018 Form 4562. 10 11 Business income limitation. Enter the smaller of business income (not less than zero) or line 5 (see instructions) 11 12 Section 179 expense deduction. Add lines 9 and 10, but don't enter more than line 11. 12 13 Carryover of disallowed deduction to 2020. Add lines 9 and 10, less line 12.. .. 13 Note: Don't use Part II or Part III below for listed property. Instead, use Part V. b 5-year property c 7-year property 7 yrs. HY V DDB V d 10-year property e 15-year property f 20-year property g 25-year property 25 yrs. S/L h Residential rental 27.5 yrs. MM S/L property 27.5 yrs. MM S/L i Nonresidential real 39 yrs. MM S/L property MM S/L Section C-Assets Placed in Service During 2019 Tax Year Using the Alternative Depreciation System 20a Class life S/L ь 12-year 12 yrs. S/L c 30-year 30 yrs. MM S/L d 40-year 40 yrs. MM S/L Part IV Summary (See instructions.) 21 Listed property. Enter amount from line 28... 21 22 Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on the appropriate lines of your return. Partnerships and S corporations-see instructions. 22 23 For assets shown above and placed in service during the current year, enter the portion of the basis attributable to section 263A costs . 23 On March 20, 2019, Javier Sanchez purchased and placed in service a new 7-year class asset costing $450,800 for use in his landscaping business, which he operates as a single member LLC (Sanchez Landscaping LLC). Rather than using bonus depreciation, Javier would like to use § 179 to expense $200,000 of this asset and then use regular MACRS to cost recover the remaining cost. During 2018, his business generated a net income of $540,960 before any § 179 immediate expense election. If required round your intermediate computations and final answers to the nearest dollar. Click here to access the depreciation table to use for this problem. a. Determine the cost recovery deductions (including first year additional depreciation) that Javier Sanchez can claim with respect to this asset in 2019 and 2020. Total cost recovery deduction in 2019: $ Total cost recovery deduction in 2020: $ b. Complete Javier's Form 4562 (page 1) for 2019. Note: For 2019, the maximum § 179 is $1,020,000 and the threshold amount is $2,550,000, If an amount is zero, enter "0". Enter amounts as positive numbers. OMB No. 1545-0172 4562 Depreciation and Amortization Form 2019 (Including Information on Listed Property) Department of the Treasury • Attach to your tax return. Attachment Internal Revenue Service (99) >Information about Form 4562 and its separate instructions is at www.irs.gov/form4562. Sequence No. 179 Name(s) shown on return Business or activity to which this form relates Identifying number Note: If you have any listed property, complete Part V before you complete Part I. 1 Maximum amount (see instructions).. 1,020,000 Total cost of section 179 property placed in service (see instructions) 2 450,800 3 Threshold cost of section 179 property before reduction in limitation (see instructions) 3 2,550,000V 4 Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter -0- . . 4 5 Dollar limitation for tax year. Subtract line 4 from line 1. If zero or less, enter -0-. If married filing separately, see instructions 1,020,000 5 (b) Cost (business use (a) Description of property (c) Elected cost only) Incorrect Landscaping equipment 450,800 v Listed property. Enter the amount from line 29 7 8 Total elected cost of section 179 property. Add amounts in column (c), lines 6 and 7 9 Tentative deduction. Enter the smaller of line 5 or line 8 10 Carryover of disallowed deduction from line 13 of your 2018 Form 4562. 10 11 Business income limitation. Enter the smaller of business income (not less than zero) or line 5 (see instructions) 11 12 Section 179 expense deduction. Add lines 9 and 10, but don't enter more than line 11. 12 13 Carryover of disallowed deduction to 2020. Add lines 9 and 10, less line 12.. .. 13 Note: Don't use Part II or Part III below for listed property. Instead, use Part V. b 5-year property c 7-year property 7 yrs. HY V DDB V d 10-year property e 15-year property f 20-year property g 25-year property 25 yrs. S/L h Residential rental 27.5 yrs. MM S/L property 27.5 yrs. MM S/L i Nonresidential real 39 yrs. MM S/L property MM S/L Section C-Assets Placed in Service During 2019 Tax Year Using the Alternative Depreciation System 20a Class life S/L ь 12-year 12 yrs. S/L c 30-year 30 yrs. MM S/L d 40-year 40 yrs. MM S/L Part IV Summary (See instructions.) 21 Listed property. Enter amount from line 28... 21 22 Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on the appropriate lines of your return. Partnerships and S corporations-see instructions. 22 23 For assets shown above and placed in service during the current year, enter the portion of the basis attributable to section 263A costs . 23

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a Determine the cost recovery deductions including first year additional depreciation that Javier Sanchez can claim with respect to this asset in 2019 ... View the full answer