Section 7-DEPRECIATION UNDER FEDERAL INCOME TAX DEPRECIATION RULES 1. During 2018, Axel Corporation purchases machinery (5-year...

Transcribed Image Text:

Section 7-DEPRECIATION UNDER FEDERAL INCOME TAX DEPRECIATION RULES 1. During 2018, Axel Corporation purchases machinery (5-year property) for $200,000 and decides not to take a Sec. 179 deduction. a. Compute maximum tax depreciation for the machinery for 2018-2023. b. Compute maximum tax depreciation for 2018-2023 if Axel does not take a Sec. 179 deduction and elects out of 100% bonus. 2. During 2018, 2018, Basil Company purchases equipment (7-year property) for $100,000, takes a Sec. 179 deduction of $50,000 and elects out of 100% bonus. a. Compute maximum tax depreciation for the equipment for 2018-2025. 3. During 2018, Diamonds Inc. purchases only one asset: equipment (7-year property) for $1,600,000. Diamonds takes the maximum Sec. 179 deduction and elects out of 100% bonus. a. Compute maximum tax depreciation percentage for the machinery for 2018-2025. 4. In 2018, Fast Money, Inc. purchases only one asset: machinery (5-year property) for $850,000. Fast Money takes a Sec. 179 deduction of $500,000 and elects out of 100% bonus. a. Compute maximum tax depreciation for 2018-2023. 5. In April 2018, RentCo purchases a building for $120,000. Compute tax depreciation for this property for 2018-2020 if: a. The building is commercial. b. The building is residential. Section 7-DEPRECIATION UNDER FEDERAL INCOME TAX DEPRECIATION RULES 1. During 2018, Axel Corporation purchases machinery (5-year property) for $200,000 and decides not to take a Sec. 179 deduction. a. Compute maximum tax depreciation for the machinery for 2018-2023. b. Compute maximum tax depreciation for 2018-2023 if Axel does not take a Sec. 179 deduction and elects out of 100% bonus. 2. During 2018, 2018, Basil Company purchases equipment (7-year property) for $100,000, takes a Sec. 179 deduction of $50,000 and elects out of 100% bonus. a. Compute maximum tax depreciation for the equipment for 2018-2025. 3. During 2018, Diamonds Inc. purchases only one asset: equipment (7-year property) for $1,600,000. Diamonds takes the maximum Sec. 179 deduction and elects out of 100% bonus. a. Compute maximum tax depreciation percentage for the machinery for 2018-2025. 4. In 2018, Fast Money, Inc. purchases only one asset: machinery (5-year property) for $850,000. Fast Money takes a Sec. 179 deduction of $500,000 and elects out of 100% bonus. a. Compute maximum tax depreciation for 2018-2023. 5. In April 2018, RentCo purchases a building for $120,000. Compute tax depreciation for this property for 2018-2020 if: a. The building is commercial. b. The building is residential.

Answer rating: 100% (QA)

Depreciation Calculations 1 Axel Corporation a Maximum Depreciation without Sec 179 Bonus Use Modifi... View the full answer