Assignment: Tax Case
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2017. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2017:
Asset
Cost
Date Placed in Service
Office furniture
$ 150,000
02/03/2017
Machinery
1,560,000
07/22/2017
Used delivery truck
40,000
08/17/2017
During 2017, Karane was very successful (and had no §179 limitations) and decided to acquire more assets this next year to increase its production capacity. These are the assets acquired during 2018:
Asset
Cost
Date Placed in
Service
Computers &Info. system
$ 40,000
03/31/2018
Luxury auto†
80,000
05/26/2018
Assembly equipment
1,200,000
08/15/2018
Storage building
700,000
11/13/2018
Karane generated taxable income in 2018 of $1,732,500 for purposes of computing the §179 expense.
Required
a. Compute the maximum 2017 depreciation deductions including §179 expense (ignoring bonus depreciation).
b. Compute the maximum 2018 depreciation deductions including §179 expense, but now assume that Karane would like to take bonus depreciation.
c. Complete Part I of Form 4562 for part (b) (use the most current form available at irs.gov).
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.