Sand Valley Corp (SVP), is adding a distribution center in Edwardsville. SVP, a calendar year taxpayer,...

 

 

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Sand Valley Corp (SVP), is adding a distribution center in Edwardsville. SVP, a calendar year taxpayer, made the following purchases in 2018. (1) New warehouse to store inventory purchase in November, 2018 for $3,000,000, (2) a Fleet of Delivery trucks $1,500,000 in December 2018 (3) New Computer Equipment for $300,000 in April 2018 and (4) $1,400,000 of furniture and Fixtures in June 2018. SVP Corp had 10,000,000 in taxable income before taking Section 179, bonus depreciation or MACRS depreciation in the current year. Assume that the company wants to maximize their section deduction in 2018. They do not want to take bonus depreciation. Use the 2018 maximum section 179 of $1,000,000 and the $2,500,000 tangible property threshold. (a) What is the Section 179 allowed? (show calc) (b) What is the calculation/test to determine whether Mid Quarter Convention Applies? Does Mid Quarter Convention Apply? Please show calculation for full credit. (c) Calculate the section 179 deduction (if eligible); and MACRS. New Warehouse Delivery Trucks New Computer Equipment (April) Furniture & Fixtures (November) (December) (June) Life Cost $3,000,000 $1,500,000 $300,000 $1,400,000 Section 179 MACRS Total Deductions: (d) How would your answer change if the taxpayer elected bonus depreciation for all eligible asset classes? Sand Valley Corp (SVP), is adding a distribution center in Edwardsville. SVP, a calendar year taxpayer, made the following purchases in 2018. (1) New warehouse to store inventory purchase in November, 2018 for $3,000,000, (2) a Fleet of Delivery trucks $1,500,000 in December 2018 (3) New Computer Equipment for $300,000 in April 2018 and (4) $1,400,000 of furniture and Fixtures in June 2018. SVP Corp had 10,000,000 in taxable income before taking Section 179, bonus depreciation or MACRS depreciation in the current year. Assume that the company wants to maximize their section deduction in 2018. They do not want to take bonus depreciation. Use the 2018 maximum section 179 of $1,000,000 and the $2,500,000 tangible property threshold. (a) What is the Section 179 allowed? (show calc) (b) What is the calculation/test to determine whether Mid Quarter Convention Applies? Does Mid Quarter Convention Apply? Please show calculation for full credit. (c) Calculate the section 179 deduction (if eligible); and MACRS. New Warehouse Delivery Trucks New Computer Equipment (April) Furniture & Fixtures (November) (December) (June) Life Cost $3,000,000 $1,500,000 $300,000 $1,400,000 Section 179 MACRS Total Deductions: (d) How would your answer change if the taxpayer elected bonus depreciation for all eligible asset classes?

Answer rating: 100% (QA)

Answer a Calculation of available section 179 expense Investment in eligible assets 1500000 300000 1400000 3200000 As total investment exceeds thresh ... View the full answer