1.Calculate the following amounts: a. The first year of depreciation on a reside

Question

1.Calculate the following amounts:

a. The first year of depreciation on a residential rental building costing $100,000, purchased on August 30.

b .The first year of depreciation on an auto used 100 percent in business, costing $30,000, purchased in May, 2015. (No bonus depreciation deducted).

c. The second year of depreciation on a computer used exclusively for business, costing $8,000, purchased May 2014. (No special elections were made in 2014)

d. The third year of depreciation on business furniture costing $1,000, purchased in July 2013, using the half-year convention and accelerated depreciation. (No special elections were made in 2013)

2. Eva purchased office equipment (7-year property) for use in her business. She paid $126,000 for the equipment on July 1, 2015. Eva did not purchase any other property during the year. For 2015, her business had net income of $26,000, before depreciation and before considering the election to expense.

a. What is the maximum amount that Eva can elect to expense in 2015 under Section 179 (before factoring in any limitations)?

b.   What is the total depreciation (regular depreciation and the amount allowed as a 2015 deduction under the election to expense) on the office equipment for 2014, assuming Eva uses the accelerated method under MACRS and claims the maximum amount allowable under the election to expense?

c.. Assuming that Eva elected to expense the equipment in 2015 and that her business has net income in 2015 of $200,000, before depreciation and before considering the election to expense, what is Eva’s total depreciation deduction (regular depreciation and the amount allowed under the election to expense) for the equipment for 2015?

3. For each of the following independent situations, indicate with a “Yes” if the asset is listed property. Indicate with a “No” if the asset is not listed property.

a. Airplane used 25 percent for business                                                                      ______

b. Fleet of cabs                                                                                     ______

c. A moving van                                                                                               ______

d. DVD player used 10 percent for business                                        ______

e. A digital camera used 30 percent of the time to list eBay items                    ______

Explanation / Answer

3)Definition of listed property:

A specific class of depreciable property that is subject to a special set of tax rules if it is used for business no more than 50% of the time. Listed property includes such items as vehicles, computer equipment and cell phones. Listed-property rules limit the amount of deductions and depreciation that can be taken if the asset isn't predominantly used in a business or trade. According to the IRS, listed property includes automobiles weighing less than 6,000 pounds, property used for transportation purposes, properties used for transportation and computers.

As from above statement

a)No

b)Yes

c)Yes

d)No

e)No

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