Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 GDS Recovery Rates (tk) for the Six Personal Property Classes Recovery Period (and Property Class) 3-year 5-year 7-year 10-year 15-year 0.3333 0.2000 0.1429 0.1000 0.0500 0.4445 0.3200 0.2449 0.1800 0.0950 0.1481 0.1920 0.1749 0.1440 0.0855 0.0741 0.1152 0.1249 0.1152 0.0770 0.1152 0.0893 0.0922 0.0693 0.0576 0.0892 0.0737 0.0623 0.0893 0.0655 0.0590 0.0446 0.0655 0.0590 0.0656 0.0591 0.0655 0.0590 0.0328 0.0591 0.0590 0.0591 0.0590 0.0591 0.0295 20-year 0.0375 0.0722 0.0668 0.0618 0.0571 0.0528 0.0489 0.0452 0.0447 0.0447 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0223 These rates are determined by applying the 200% DB method (with switchover to the SL method) to the recovery period with the half-year convention applied to the first and last years. Rates for each period must sum to 1.0000 These rates are determined with the 150% DB method instead of the 200% DB method (with switchover to the SL method) and are rounded off to four decimal places. MACRS Class Lives and Recovery Periods 5 Asset Class 00.11 00.12 00.22 00.23 00.241 00.242 00.26 01.1 10.0 13.2 13.3 15.0 22.3 24.4 28.0 30.1 32.2 34.0 36.0 37.11 37.2 48.12 49.13 49.21 79.0 Descriptions of Assets Office furniture and equipment Information systems, including computers Automobiles, taxis Buses Light general purpose trucks Heavy general purpose trucks Tractor units for use over the road Agriculture Mining Production of petroleum and natural gas Petroleum refining Construction Manufacture of carpets Manufacture of wood products and furniture Manufacture of chemicals and allied products Manufacture of rubber products Manufacture of cement Manufacture of fabricated metal products Manufacture of electronic components, products, and systems Manufacture of motor vehicles Manufacture of aerospace products Telephone central office equipment Electric utility steam production plant Gas utility distribution facilities Recreation Class Life 10 6 3 9 4 6 4 10 10 14 16 6 9 10 9.5 14 20 12 6 12 10 18 28 35 10 Recovery Periods GDS ADS 7 10 5 5 5 5 5 5 6 3 4 7 10 7 10 7 14 10 16 5 6 5 9 7 5 9.5 7 14 15 20 7 12 5 7 12 7 10 10 18 20 28 20 35 7 10 10 A piece of construction equipment (asset class 15.0) was purchased by the Jones Construction Company in 2015. The cost basis was $260,000. The plan is to use the equipment and dispose it after about 8 years of service a). Determine the MACRS-GDS and MACRS-ADS recovery periods for the equipment. b). Determine the annual GDS and ADS depreciation deductions for this property. c). If the company disposes the equipment and sells it sooner in 2017, instead of 2023, what would the the GDS and ADS depreciations for that year? d). Based on (c), what are the corresponding book values under the GDS and ADS depreciations? Click the icon to view the partial listing of depreciable assets used in business. 5 Click the icon to view the GDS Recovery Rates (2) years. a). The GDS recovery period is The ADS recovery period is ve years b). Determine the GDS depreciation deductions for this property. (Round to the nearest dollar.) The GDS depreciation deductions, $ $ Year 2015 2016 2017 $ S 2018 $ 2019 2020 SI $ the depreciation deductions this property. (Round to the nearest dollar.) The ADS depreciation deductions, $ $ SI Year 2015 2016 2017 2018 2019 2020 SI SI SI 2021 $ c). The GDS depreciation deduction for the year 2017 would be $(Round to the nearest dollar.) The ADS depreciation deduction for the year 2017 would be $(. (Round to the nearest dollar.) d). The book value at end of 2017 based on GDS depreciations is $1 The book value at end of 2017 based on ADS depreciations is $(Round to the nearest dollar.) Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 GDS Recovery Rates (tk) for the Six Personal Property Classes Recovery Period (and Property Class) 3-year 5-year 7-year 10-year 15-year 0.3333 0.2000 0.1429 0.1000 0.0500 0.4445 0.3200 0.2449 0.1800 0.0950 0.1481 0.1920 0.1749 0.1440 0.0855 0.0741 0.1152 0.1249 0.1152 0.0770 0.1152 0.0893 0.0922 0.0693 0.0576 0.0892 0.0737 0.0623 0.0893 0.0655 0.0590 0.0446 0.0655 0.0590 0.0656 0.0591 0.0655 0.0590 0.0328 0.0591 0.0590 0.0591 0.0590 0.0591 0.0295 20-year 0.0375 0.0722 0.0668 0.0618 0.0571 0.0528 0.0489 0.0452 0.0447 0.0447 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0223 These rates are determined by applying the 200% DB method (with switchover to the SL method) to the recovery period with the half-year convention applied to the first and last years. Rates for each period must sum to 1.0000 These rates are determined with the 150% DB method instead of the 200% DB method (with switchover to the SL method) and are rounded off to four decimal places. MACRS Class Lives and Recovery Periods 5 Asset Class 00.11 00.12 00.22 00.23 00.241 00.242 00.26 01.1 10.0 13.2 13.3 15.0 22.3 24.4 28.0 30.1 32.2 34.0 36.0 37.11 37.2 48.12 49.13 49.21 79.0 Descriptions of Assets Office furniture and equipment Information systems, including computers Automobiles, taxis Buses Light general purpose trucks Heavy general purpose trucks Tractor units for use over the road Agriculture Mining Production of petroleum and natural gas Petroleum refining Construction Manufacture of carpets Manufacture of wood products and furniture Manufacture of chemicals and allied products Manufacture of rubber products Manufacture of cement Manufacture of fabricated metal products Manufacture of electronic components, products, and systems Manufacture of motor vehicles Manufacture of aerospace products Telephone central office equipment Electric utility steam production plant Gas utility distribution facilities Recreation Class Life 10 6 3 9 4 6 4 10 10 14 16 6 9 10 9.5 14 20 12 6 12 10 18 28 35 10 Recovery Periods GDS ADS 7 10 5 5 5 5 5 5 6 3 4 7 10 7 10 7 14 10 16 5 6 5 9 7 5 9.5 7 14 15 20 7 12 5 7 12 7 10 10 18 20 28 20 35 7 10 10 A piece of construction equipment (asset class 15.0) was purchased by the Jones Construction Company in 2015. The cost basis was $260,000. The plan is to use the equipment and dispose it after about 8 years of service a). Determine the MACRS-GDS and MACRS-ADS recovery periods for the equipment. b). Determine the annual GDS and ADS depreciation deductions for this property. c). If the company disposes the equipment and sells it sooner in 2017, instead of 2023, what would the the GDS and ADS depreciations for that year? d). Based on (c), what are the corresponding book values under the GDS and ADS depreciations? Click the icon to view the partial listing of depreciable assets used in business. 5 Click the icon to view the GDS Recovery Rates (2) years. a). The GDS recovery period is The ADS recovery period is ve years b). Determine the GDS depreciation deductions for this property. (Round to the nearest dollar.) The GDS depreciation deductions, $ $ Year 2015 2016 2017 $ S 2018 $ 2019 2020 SI $ the depreciation deductions this property. (Round to the nearest dollar.) The ADS depreciation deductions, $ $ SI Year 2015 2016 2017 2018 2019 2020 SI SI SI 2021 $ c). The GDS depreciation deduction for the year 2017 would be $(Round to the nearest dollar.) The ADS depreciation deduction for the year 2017 would be $(. (Round to the nearest dollar.) d). The book value at end of 2017 based on GDS depreciations is $1 The book value at end of 2017 based on ADS depreciations is $(Round to the nearest dollar.)