Help! MACRS 40% Test and Partial Year Depreciation. Large Corporation acquired a

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MACRS 40% Test and Partial Year Depreciation. Large Corporation acquired and placed in service the following 100% business-use assets. Large did not elect Sec. 179 expensing on any of these properties. • Truck (light-duty, modified non-personal use) costing $36,000: Placed in service on March 3, 2015 with a 5-year MACRS recovery period. • Machinery costing $85,000: Placed in service on November 15, 2015 with a 7-year MACRS recovery period. • Land costing $90,000: Placed in service on October 12, 2015. • Building costing $280,000: Placed in service on December 4, 2015 with a 39-year MACRS recovery period.

A. What is Large’s total depreciation deduction in 2015?

B. Large Corporation sells the machinery on February 2, 2017 and sells the building on September 18, 2017. What are the adjusted bases of these two assets on the dates of sale (compute accumulated depreciation to date of sale)?

Explanation / Answer

Solution:

(A). Larger's Total Depreciation Caluculation:

   According the Sectiion 179 Lorger Vehicals Up to $25,000 of the cost of vehicles rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight (like RV) can be deducted using a section 179 deduction. This limitation on sport utility vehicles does not impact larger commercial vehicles, commuter vans, or buses.

(1). Truck:

  Depreciation = $ 36,000 - 0 / 5 Years

= $ 7,200

(2). Machinery:

  Depreciation = $85,000 - 0 / 7 Years

= $ 12,142.85

(3). Buildings:

  Depreciation = $2,80,000 - 0 / 39 Years

= $ 7,179

(B).4 Total Depreciation:

   = 7,200 + 12,143 + 7,179

   = 26,522

(B). Caluculation of Accumulated Depreciation:

(1). Machinery Value = $ 85,000

Life time of the Machinery = 7 Years

   No Solvage Vlue

Accumulated Depreciation = $85,000 - 0 / 7 Years

   = $ 12,142.85

   = $ 12,142.85 * 7

   =$ 85,000

(B). Caluculation of Accumulated Depreciation:

(2). Machinery Value = $ 2,80,000

Life time of the Machinery = 39 Years

   No Solvage Vlue

Accumulated Depreciation = $2,80,000 - 0 / 39 Years

= $ 7,179

= $ 7,179 * 39 Years

=$ 2,80,000

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