The Tepper Company, a calendar year taxpayer, began doing business on 1/1/13. Tepper is in the business of providing data analysis services (it is NOT a manufacturer). During 2013, Tepper acquired the following assets and capitalized the following expenses:
Description Date Placed in Service Initial Basis
|
Start-up Costs
|
1/1/13
|
$53,000
|
|
Office Furniture
|
1/1/13
|
75,000
|
|
Computer Hardware
|
2/1/13
|
10,000
|
|
Calculators
|
2/1/13
|
5,000
|
|
Copy Machines
|
2/1/13
|
12,000
|
|
Land
|
6/13/13
|
300,000
|
|
Building
|
6/13/13
|
450,000
|
|
Paving
|
10/15/13
|
100,000
|
|
Office Fixtures
|
11/1/13
|
80,000
|
On 4/1/2013, Tepper acquired the assets of Fessler, Co (one of Tepper's competitors) and allocated basis to the following assets:
Description Date Placed in Service Initial Basis
|
Computer Hardware
|
4/1/13
|
490,000
|
|
Computer Software (see below)
|
4/1/13
|
685,000
|
|
Office Communications Equipment
|
4/1/13
|
30,000
|
|
Office furniture & Fixtures
|
4/1/13
|
150,000
|
|
Goodwill
|
4/1/13
|
90,000
|
$200,000 of the acquired computer software was off the shelf purchased by the competitor at Best Buy. The remaining $485,000 of the computer software was specially developed for Fessler's use by paid consultants.
For 2013, Tepper reported taxable income of $5 million prior to taking into account Code section 179, depreciation or amortization.
Compute Tepper's 2013 cost recovery deductions related to the assets listed (showing calculations for each asset -
Required: All projects must be submitted in Excel and, where computations are required, Excel must be used to make them (i.e., do not use Excel as WORD). There should be separate tabs as follows:
• Synopsis - Summarizes the 179/depreciation/amortization deductions
• 179 Tab: Analyzes 179 and computes the 179 deduction
• Bonus Tab: Analyzes bonus depreciation and computes it
• MACRS Tab: Provides MACRS depreciation computations
• Other: Provides computation for other cost recovery (e.g., amortization and non-MACRS property)