2023 Assets Description Cost Section 179 Expense Bonus MACRS Basis Current MACRS Depreciation Current Amortization Total Cost Recovery Deduction Office Furniture Machinery Used Delivery Truck $ 400,000 $ 0 $ 1,810,000 0 400,000 $ 1,810,000 0 $ 0 0 $ 0 0 400,000 1,810,000 90,000 0 90,000 0 0 0 90,000 2024 Assets Computers and Information System 450,000 0 450,000 0 0 0 450,000 Luxury Auto 92,500 0 18,200 74,300 14,860 0 33,060 Assembly Equipment 1,200,000 1,160,000 40,000 0 0 0 1,200,000 Storage Building 800,000 0 800,000 0 0 0 800,000 Inventory Office Furniture Machinery 270,000 0 0 0 0 0 0 280,000 280,000 0 0 0 0 0 300,000 300,000 0 0 0 0 0 Patent 243,000 0 0 0 0 16,200 16,200 Goodwill Building Land 6,500 0 0 0 0 433 433 480,000 55,000 425,000 0 0 0 0 70,000 0 0 0 0 0 Totals $ 6,492,000 $ 1,795,000 $ 4,033,200 $ 74,300 14,860 $ 16,633 $ 4,799,693
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Now assume that during 2024, Karane decides to buy a competitor's assets for a purchase price of $1,649,500. Compute the maximum 2024 cost recovery, including §179 expense and bonus depreciation. Karane purchased the following assets in 2024 for the lump-sum purchase price:
Note: Round your final answers to the nearest whole dollar amount.
| Asset | Cost | Date Placed in Service |
|---|---|---|
| Inventory | $ 270,000 | 09/15 |
| Office furniture | 280,000 | 09/15 |
| Machinery | 300,000 | 09/15 |
| Patent | 243,000 | 09/15 |
| Goodwill | 6,500 | 09/15 |
| Building | 480,000 | 09/15 |
| Land | 70,000 | 09/15 |
Assume that Karane takes the maximum section 179 expense for the Assembly Equipment.
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2023. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2023:
| Asset | Cost | Date Placed in Service |
|---|---|---|
| Office furniture | $ 400,000 | 02/03 |
| Machinery | 1,810,000 | 07/22 |
| Used delivery truck*Note: | 90,000 | 08/17 |
*Note:Not considered a luxury automobile.
During 2023, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2024 to increase its production capacity. These are the assets acquired during 2024:
| Asset | Cost | Date Placed in Service |
|---|---|---|
| Computers and information system | $ 450,000 | 03/31 |
| Luxury auto*Note: | 92,500 | 05/26 |
| Assembly equipment | 1,200,000 | 08/15 |
| Storage building | 800,000 | 11/13 |
*Note:Used 100 percent for business purposes.
Karane generated taxable income in 2024 of $1,795,000 for purposes of computing the §179 expense limitation. (Use MACRS Table 1, Table 2, Table 3, Table 4, Table 5, and Exhibit 10-10.)
Note: Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.
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