Problem 8-12 Modified Accelerated Cost Recovery System (MACRS), Listed Property, Limitation on Depreciation of Luxury Automobiles (LO 8.2, 8.4, 8.5)

During 2021, Pepe Guardio purchases the following property for use in his calendar year-end manufacturing business:

Item	Date Acquired	Cost
Manufacturing equipment (7 year)	June 2	$50,000
Office furniture	September 15	8,000
Office computer	November 18	2,000
Passenger automobile (used 85 percent for business)	May 31	55,000
Warehouse	July 23
Building		170,000
Land		135,000

Pepe uses the accelerated depreciation method under MACRS and takes bonus depreciation.

Complete Form 4562, Depreciation and Amortization to determine the depreciation expense.

Line 21, 22, and 25 I can't figure out. Please explain and show me how you figured the answers out.

19 i

i Nonresidential real

7/21

170,000

39 yrs.

MM

S/L

2,001

Part IV

Summary (See instructions.)

21	Listed property. Enter amount from line 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			21	fill in the blank
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 corporationssee instructions . . . . . . . . . . . . . . . . . . .			22	fill in the blank
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

For Paperwork Reduction Act Notice, see separate instructions.

Cat. No. 12906N

Form 4562 (2021)

Form 4562 (2021)

Page 2

Part V		Listed Property (Include automobiles, certain other vehicles, certain aircraft, and property used for entertainment,
		recreation, or amusement.)
		Note: For any vehicle for which you are using the standard mileage rate or deducting lease expense, complete only 24a, 24b, columns (a) through (c) of Section A, all of Section B, and Section C if applicable.
Section ADepreciation and Other Information (Caution: See the instructions for limits for passenger automobiles.)

24a Do you have evidence to support the business/investment use claimed? Yes No

24b If "Yes," is the evidence written? Yes No

(a)		(b)	(c)	(d)	(e)	(f)	(g)		(h)		(i)
Type of property (list vehicles first)		Date placed in service	Business/ investment use percentage	Cost or other basis	Basis for depreciation (business/ investment use only)	Recovery period	Method/ Convention		Depreciation deduction		Elected section 179 cost
25	Special depreciation allowance for qualified listed property placed in service during the tax year and used more than 50% in a qualified business use. See instructions . . . . . . . . . . .							25	fill in the blank