Q is single, age 35 and started a new business on 1/15/2017; he trains sports an
ID: 2518995 • Letter: Q
Question
Q is single, age 35 and started a new business on 1/15/2017; he trains sports announcers. Following are various transactions for 2017: a) He purchased a commercial office building on 2/1/2017; the cost of the building and land was $250,000 (building 80% of the cost, the land 20% of the cost). b) Q purchased office furniture on 2/15/2017 for $10,000. He does not take the section 179 deduction, but does elect to take the 50% bonus depreciation c) Q has the following income and expenses related to this business: Income Mortgage interest Property taxes Utilities Supplies and fees Telephone Estimated tax payments - Federal $130,000 8,000 2,000 5,000 8,000 2,000 15,000 Requirements: 1. Are business expense deductions FOR AGI or FROM AGI? 2. Calculate depreciation expense for the building and the office furniture. Your answer should include following: class life, convention used, depreciation table, and a detailed calculation 3. Prepare Form 4562 4. Prepare Schedule C. 5. What is the new tax law for reporting income of a sole-proprietor? How will it affect Q in 2018? 6. If Q sells the office furniture on 9/20/18 for $6,000, what is his gain or loss? Your answer should include the following: depreciation calculation for 2018, calculation of adjusted basis, calculation of gain or losExplanation / Answer
6.
15/01/2017 Started Business Depreciation 01/02/2017 Total 250000 Building 200000 9166.67 Land 50000 15/02/2017 Furniture 10000 2625 Income Income 130000 Interest Expense -8000 Property taxes Expense -2000 Utilities Expense -5000 Supplies Expense -8000 Telephone Expense -2000 Federal Tax Expense -15000 Depreciation Expense -11792Related Questions
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