Current Total Cost Description Cost §179 Expense MACRS Basis MACRS Recovery Depreciation Deduction Office furniture $ 400,000 $ 0 $ 400,000 $ 57,160 $ 57,160 Machinery 1,810,000 1,160,000 650,000 92,885 1,252,885 Used delivery truck 90,000 0 90,000 18,000 18,000 Total $ 2,300,000 $ 1,160,000 $ 1,140,000 $ 168,045 $ 1,328,045
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.
Compute the maximum 2023 depreciation deductions, including §179 expense (ignoring bonus depreciation).
Note: Apply the §179 deduction to the most expensive eligible asset first. Round your final answers to nearest whole dollar.
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