On January 20, 2021, Javier Sanchez purchased and placed in service a new 7-year class asset costing $477,200 for use in his landscaping business, which he operates as a single member LLC (Sanchez Landscaping LLC). Rather than using bonus depreciation, Javier would like to use § 179 to expense $200,000 of this asset and then use regular MACRS to cost recover the remaining cost. During 2021, his business generated a net income of $572,640 before any § 179 immediate expense election.
On January 20, 2021, Javier Sanchez purchased and placed in service a new 7-year class asset costing $477,200 for use in his landscaping business, which he operates as a single member LLC (Sanchez Landscaping LLC). Rather than using bonus depreciation, Javier would like to use § 179 to expense $200,000 of this asset and then use regular MACRS to cost recover the remaining cost. During 2021, his business generated a net income of $572,640 before any § 179 immediate expense election.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Q27.
Transcribed Image Text:Problem 8-40 (Algorithmic) (LO. 2, 3, 9)
On January 20, 2021, Javier Sanchez purchased and placed in service a new 7-year class asset costing $477,200 for use in his landscaping
business, which he operates as a single member LLC (Sanchez Landscaping LLC).
Rather than using bonus depreciation, Javier would like to use § 179 to expense $200,000 of this asset and then use regular MACRS to cost
recover the remaining cost. During 2021, his business generated a net income of $572,640 before any 5 179 immediate expense election.
If required round your intermediate computations and final answers to the nearest dollar. Click here to access the
depreciation table to use for this problem.
a. Determine the cost recovery deductions (including first-year additional depreciation) that Javier Sanchez can claim with respect to this
asset in 2021 and 2022.
Total cost recovery deduction in 2021: $
Total cost recovery deduction in 2022: S
b. Complete Javier's Form 4562 (page 1) for 2021.
X
X
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