Question

6. On March 20, Phillip moved his business out of the old offices at 1103 Allium Lane into a newly constructed and equipped office on Grove Street. Phillip sold the old office building and all its furnishings. Phillip's expenditures for the new office building are as follows: Date Acquired & Placed into Service 3/20 Land 3/20 Office building 3/20 Furniture 4/1 Computer system Asset Cost $300,000 800,000 200,000 50,000 Phillip computes his cost recovery allowance using MACRS. He would like to use the $179 immediate expensing, but he has elected to not claim any bonus depreciation. Phillip has never claimed $179 or bonus depreciation before. 7. The assets Phillip sold on March 20 are as follows: Date Acquired Asset Sales Price 5/1/12 Office building $690,000 5/1/12 Land 70,000 7/1/12 Furniture 180,000 4/12/15 Office equipment 100,000 Accumulated Depreciation as of Beginning of the Year $129,825 Original Cost $900,000 100,000 239,000 120,000 206,998 67,524 Phillip has never sold any assets relating to his business before this transaction. Phillip did not take $179 or bonus when he purchased these assets.

Answer 1

6)

As Per Section 179 - Maximum Depreciation Deducted Up to $1020000

Calculation Of Depreciation as per MACRS Depreciation Method :-

Office Building Purchase Price = $800000

Office Building Useful Life = 39 years

Depreciation of Office Building = $800000 / 39 = 20512.82

Furniture Purchase Price = $200000

Furniture Useful Life = 7 Years

Depreciation of Furniture = $200000 / 7 = $28571.43

Computer System Purchase Price = $50000

Computer System Useful Life = 3 years

Depreciation of Computer System = $50000 / 3 = $16666.67