Please give an explanation! Thank You! Check my w At the beginning of its 2018 t
ID: 2337138 • Letter: P
Question
Please give an explanation! Thank You!
Check my w At the beginning of its 2018 tax year, Hiram owned the following business assets: Date Placed Initial Accumulated Recovery Depreciation in Service Cost $30,750 70,000 58,000 Depreciation Period Convention 7-year Half-year 5-year Half-year 5-year Half-year 6 points Furniture Equipment Machinery 6/19/16 5/2/15 9/30/15 $11,925 49,840 41,296 Skipped On July 8, Hiram sold its equipment. On August 18, it purchased and placed in service new tools costing $589,000; these tools are three-year recovery property. These were Hiram's only capital transactions for the year. Compute Hiram's maximum cost recovery deduction for 2018. In making your computation, assume that taxable income before depreciation exceeds $1,000,000. Use Table 7-2. (Enter all amounts as positive values. Round your intermediate computations and final answers to the nearest whole dollar amount.) eBook Print 2018 MACRS Depreciation Furniture Equipment Machinery Total MACRS Depreciation Section 17Wbonus on new tools Total 2018 cost recovery 0Explanation / Answer
Hiram can expense and deduct $589000 of the cost of tools purchased in 2018 under sec 179.of the remaining cost of $411000 $ 205500 is deductible as 50% bonus depreciation
Initial Cost Basis Recovery Period Yr Recovery % 2018 MACRS Depreciation
Furn $30750 Yr 3 17.49 $5378
Equip $70000 Yr 4 11.52(one half) $4.032
Mach $58000 Yr 4 11.52 $6682
Tools $205500 Yr 1 33.33 $68493
sec 179 and bonus dep $794500
Total 2018 Cost Recovery $879085