Stephen operates a sole proprietorship. He had a taxable income of $32,832 in 2020 and $55,330 in 2021 from his business before accounting for the events described below.

Stephen acquired a delivery van for $37,257 on July 9, 2017, and immediately placed the van into service in his business. He has never used the van for personal purposes.

Stephen bought a drill press at a cost of $8,600. He placed the drill press into service in the business on May 11, 2019. Stephen subsequently sold the drill press for $3,700 on May 13, 2021.

Stephen purchased a garage building (Old Garage) for $223,200 and placed the garage into service in his business on September 6, 2018. On February 11, 2020, Stephen exchanged the Old Garage for a different garage (Replacement Garage) in a transaction that qualified as a like-kind exchange. On the date of the exchange, the Old Garage had a fair market value of $217,339 and the Replacement Garage had a fair market value of $226,139. As part of the exchange, the other party gave Stephen an office chair with a fair market value of $700 and Stephen gave the other party $9,500 in cash. The other party had used both the Replacement Garage and the office chair in its business and, since the date of the exchange, Stephen has used both the Replacement Garage and the office chair in his business.

On March 8, 2020, Stephen placed a tablet computer into service in his business. Stephen paid $1,590 for the tablet. He has documentation to show that, during 2020, he used the tablet 100% of the time for business purposes. During 2021, Stephen used the tablet 100% of the time for business purposes too.

Stephen paid $1,800 for a laptop computer, which he placed into service in his business on April 13, 2020. He has used the laptop exclusively in his business (i.e., no personal use).

Stephen spent $152,000 on an office building, which he placed into service in his business on August 10, 2020.

On May 9, 2021, Stephen placed a paper shredder into service. Stephen paid $1,850 to purchase the shredder.

Stephen placed a sander, which cost $14,813, into service on October 7, 2021.

Finally, Stephen placed scaffolding into service in his business on October 13, 2021. The scaffolding cost $42,000. The cost of the scaffolding is the only amount (from either 2020 or 2021) for which Stephen made a section 179 election. Required: Explain what taxable income Stephen had from his business in 2020 and 2021 after accounting for the events described above.

For purposes of this requirement, assume that 

(1) prior to the calendar year 2019, Stephen took bonus depreciation when allowed; 

(2) Stephen chose not to take bonus depreciation for any assets placed into service during calendar years 2019, 2020, and 2021; and 

(3) other than making a section 179 election with respect to the scaffolding, Stephen has not made any other tax elections (e.g., he has not elected to deduct costs under the de minimis safe harbor rules for low-cost personal property).

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