LRRR Corporation, a calendar year C corporation, purchased and placed in service the following new assets on the following dates:
Date Assets
6/20/2016 Computers 700,000
9/15/2016 Copiers 800,000
10/15/2016 Office Equipment 1,100,000
Asset Cost Computers $700,000 Copiers $800,000 Office Equipment $1,100,000
LRRR Corporation purchased no other assets during 2016 and its net income for 2016 is $2,000,000 before taking cost recovery deductions into account.
a. What is the maximum federal cost recovery deduction LRRR Corporation may take on the assets listed above in 2016? Please show your work and explain your calculations.
b. What is the maximum federal cost recovery deduction LRRR Corporation may take on the assets listed above in 2017? Please show your work and explain your calculations.
b. If LRRR Corporation sold only the copiers on September 30, 2018, what would LRRR Corporation’s federal cost recovery deduction be on the copiers in 2018? (You do not need to calculate the federal cost recovery deduction on the computers or on the office equipment in 2018.) Please show your work and explain your calculations.
4. Assume that LRRR Corporation (see Question 3 above) also purchased and placed in service a new office building for $2,000,000 on July 31, 2016. The land was allocated $500,000 and the building was allocated $1,500,000 of the purchase price.LRRR Corporation plans to use the office building until October of 2020, when it will move to a larger office building.
What is the maximum tax cost recovery deduction LRRR can take on the office building in 2016? Please show your work and explain your calculations.
What is the maximum tax cost recovery deduction LRRR Corporation can take on the office building in 2017 through 2019? Please show your work and explain your calculations.
c. What is the maximum tax cost recovery deduction LRRR Corporation can take on the office building in 2020, assuming it sells the office building on October 1, 2020? Please show your work and explain your calculations.