While completing undergraduate school work in information systems, Dallin Bourne and Michael Banks decided to start a technology support company called eSys Answers. During year 1, they bought the following assets and incurred the following start-up fees: Year 1 Assets Computers (5-year) Office equipment (7-year) Furniture (7-year) Start-up costs Purchase Date October 30, Y1 October 30, Y1 October 30, Y1 October 30, Y1 Basis $ 15,000 10,000 3,000 17,000 In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started by fellow information systems students preparing to graduate. The customer list cost $10,000, and the sale was completed on April 30. During their summer break, Dallin and Michael passed on internship opportunities in an attempt to really grow their business into something they could do full time after graduation. In the summer, they purchased a small van (for transportation, not considered a luxury auto) and a pinball machine (to help attract new employees). They bought the van on June 15, Y2, for $15,000 and spent $3,000 getting it ready to put into service. The pinball machine cost $4,000 and was placed in service on July 1, Y2. Year 2 Assets Purchase Date Basis Van June 15, Y2 $ 18,000 Pinball machine (7-year) July 1, Y2 4,000 Customer list April 30, Y2 10,000 Assume that eSys Answers does not claim any $179 expense or Form 4562 OMB No Depreciation and Amortization (Including Information on Listed Property) Attach to your tax return. Go to www.irs.gov/Form4562 for instructions and the latest information Business or activity to which this form relates 20 Department of the Treasury Internal Revenue Service (99) Name(s) shown on return Attachments Identifying number Part Election To Expense Certain Property Under Section 179 Note: If you have any listed property, complete Part V before you complete Part) 1 Maximum amount (see instructions) 2 Total Cost of section 179 property placed in service (see instructions) 3 Threshold cost of section 179 property before reduction in limitation (see instructions) 4 Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter- 5 Dollar limitation for tax year. Subtract line 4 from line 1. If zero or less enter-O- If married filing separately. See instructions 6 (a) Description of property (b) Cost (business use) (c) Elected cost 7 Listed property, Enter the amount from line 29 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 11 Business income limitation. Enter the smaller of business income (not less than zero) or line 5. see instructions 12 Section 179 expense deduction. Add lines 9 and 10, but don't enter more than line 11 13 Carryover of disallowed deduction to 2020. Add lines 9 and 10 loss line 12 Note: Do not use Part II or Part II below for listed property. Instead, use Part V. Part II Special Depreciation Allowance and Other Depreciation 13 (Don't include listed property, see instructi OMB No 1545-0172 2019 Depreciation and Amortization (Including Information on Listed Property) Attach to your tax return. Go to www.irs.gov/Form4562 for instructions and the latest information. Business or activity to which this form relates e Certain Property Under Section 179 If you have any listed property, complete Part V before you complete Part I. Attachment Sequence No. 179 Identifying number(xxx-xx-xxxx) 1 2 3 4 vice (see instructions) aduction in limitation (see instructions) 2. If zero or less, enter -- m line 1. If zero or less, enter -o- If married filing separately. See Instructions of property (b) Cost (business use) 5 (c) Elected cost 8 9 amounts in column (c), lines 6 and 7 or line 8 of your 2018 Form 4562 of business income (not less than zero) or line 5. see instructions od 10, but don't enter more than line 11 lines 9 and 10, less line 12 Part III below for listed property. Instead, use Part V. n Allowance and Other Depreciation 10 11 12 13 (Don't include listed property, see instructions.) Part II Special Depreciation Allowance and Other Depreciation (Don't include listed property. See instruc 14 Special depreciation allowance for qualified property (other than listed property) placed in service during the tax year. See instructions 15 Property subject to section 168(1)(1) election 16 Other depreciation (including ACRS) Part III MACRS Depreciation (Don't include listed property. See instructions.) Section A 17 MACRS deductions for assets placed in service in tax years beginning before 2019 18 If you are electing to group any assets placed in service during the tax year into one or more general asset accounts, check here Section B-Assets Placed in Service During 2019 Tax Year Using the General Depreciation System (a) Classification of property (b) Month and year placed in service (c) Basis for depreciation business/investment use only-See instructions) (d) Recovery period (e) Convention (1) Method 19a 3-year property b 5-year property e 7-year properly d 10-year property e 15-year property 1 20-year property g 25-year property h Residential rental property Nonresidential real 25 yrs. 27.5 yrs. 27.5 yrs 39 yrs. MM MM MM S/L S/L S/L S/L Required information ance allu ulei vepiecial (DURCUUE SIEU properly. SEE HISU UGLIONS.) er than listed property) placed in service during the tax year. See instructions 14 15 16 (Don't include listed property. See instructions.) Section A ars beginning before 2019 17 during the tax year into one or more general asset accounts, check here s Placed in Service During 2019 Tax Year Using the General Depreciation System h and your in service (c) Basis for depreciation (business/investment use only See instructions) (d) Recovery period (e) Convention () Method (g) Depreciation deduction 25 yrs. 27.5 yrs. 27.5 yrs. 39 yrs. MM MM MM MANA S/L S/L S/L S/L 25 yrs 27.5 yrs 27.5 yrs 39 yrs d 10-year property e 15-year property 1 20-year property g 25-year property S/L h Residential rental MM S/L property MM S/L Nonresidential real 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 b 12-year S/L c 30-your MM S/L d 40-year MM SAL Part IV Summary (See instructions) 21 Listed property Enter amount from line 28 22 Total. Add amounts from line 12, lines 14 through 17, ines 19 and 20 in column (g), and line 21. Enter here and on the appropriate lines of your return. Partnerships and corporations-see instructions 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 12 yrs 30 yrs 40 yrs