Problem:
During 2012, TM had huge success (and had no §179 limitations) and Steve acquired more assets the next year to increase its production capacity. These are the assets acquired during 2013:
|
Asset
|
Cost
|
Date Placed in Service
|
|
Computers & Info. System
|
$40,000
|
03/31/2013
|
|
Luxury Autoâ?
|
80,000
|
05/26/2013
|
|
Assembly Equipment
|
475,000
|
08/15/2013
|
|
Storage Building
|
400,000
|
11/13/2013
|
Used 100% for business purposes. Use 2012 limitations for 2013.
TM generated a taxable income in 2013 before any §179 expense of $732,500.
1. Compute maximum 2012 depreciation deductions including §179 expense (ignoring bonus depreciation).
2. Compute maximum 2013 depreciation deductions including §179 expense (ignoring bonus depreciation).
3. Compute maximum 2013 depreciation deductions including §179 expense, but now assume that Steve would like to take bonus depreciation.
4. Ignoring part (c), now assume that during 2013, Steve decides to buy a competitor's assets for a purchase price of $350,000. Compute maximum 2013 cost recovery including §179 expense (ignoring bonus depreciation). Steve purchased the following assets for the lump-sum purchase price.
|
Asset
|
Cost?
|
Date Placed in Service
|
|
Inventory
|
$20,000
|
09/15/2013
|
|
Office furniture
|
30,000
|
09/15/2013
|
|
Machinery
|
50,000
|
09/15/2013
|
|
Patent
|
98,000
|
09/15/2013
|
|
Goodwill
|
2,000
|
09/15/2013
|
|
Building
|
130,000
|
09/15/2013
|
|
Land
|
20,000
|
09/15/2013
|
5. Complete Part I of Form 4562 for part (b)