On March 5, 2022, Javier Sanchez purchased and placed in service a new 7-year class assetcosting $388,400 for use in his landscaping business, which he operates as a single memberLLC (Sanchez Landscaping LLC).Rather than using bonus depreciation, Javier would like to use § 179 to expense $200,000this asset and then use regular MACRS to cost recover the remaining cost. During 2022, hisbusiness generated a net income of $466,080 before any § 179 immediate expense election.If required round your intermediate computations and final answers to the nearestdollar. Click here to access the depreciation table to use for this problem.a. Determine the cost recovery deductions (including first-year additional depreciation) thatJavier Sanchez can claim with respect to this asset in 2022 and 2023.Total cost recovery deduction in 2022: $ 226,922Total cost recovery deduction in 2023: $ 45,762b. Complete Javier's Form 4562 (page 1) for 2022.Note: For 2022, the maximum § 179 is $1,080,000 and the threshold amount is $2,700,000.If an amount is zero, enter "0". Enter amounts as positive numbers.Form 4562Department of theTreasury InternalRevenue ServiceName(s) shown on returnJavier Sanchez12Depreciation and Amortization(Including Information on Listed Property)Attach to your tax return.3Part I Election To Expense Certain Property Under Section 179Note: If you have any listed property, complete Part V before you complete Part I.Maximum amount (see instructions)2022Attachmentfor instructions and the latest Sequenceinformation.No. 179Business or activity to which this form relatesSanchez Landscaping, LLCTotal cost of section 179 property placed in service (see instructions)Threshold cost of section 179 property before reduction in limitation (seeinstructions). .Identifyingnumber123-45-6789OMB No.1545-017212 4567891011121315Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter -0- . . .416Dollar limitation for tax year. Subtract line 4 from line 1. If zero or less, enter-0-. If married filing separately, see instructions(a) Description of propertyLandscaping equipmentPartIIIListed property. Enter the amount from line 29(b) Cost(business useonly)Total elected cost of section 179 property. Add amounts in column (c), lines 6and 7Tentative deduction. Enter the smaller of line 5 or line 8..7Carryover of disallowed deduction from line 13 of your 2021 Form 4562......(c) Elected costProperty subject to section 168(f)(1) electionOther depreciation (including ACRS)Business income limitation. Enter the smaller of business income (not less thanzero) or line 5 (see instructions) . . . . . .Section 179 expense deduction. Add lines 9 and 10, but don't enter more thanline 11.....14 Special depreciation allowance for qualified property (other than listed property)placed in service during the tax year (see instructions).Carryover of disallowed deduction to 2023. Add lines 9and 10, less line 12 . . . .Note: Don't use Part II or Part III below for listed property. Instead, use Part V.Part Special Depreciation Allowance and Other Depreciation (Don't include listed property.IISee instructions.)135MACRS Depreciation (Don't include listed property. See instructions.)89101112141516

The expected decline in the value of a fixed asset over the course of its use is called…

On March 5, 2022, Javier Sanchez purchased and placed in service a new 7-year class asset costing $388,400 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 2022, his business generated a net income of $466,080 before any § 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 2022 and 2023. Total cost recovery deduction in 2022: $226,922 Total cost recovery deduction in 2023: $ 45,762 b. Complete Javier's Form 4562 (page 1) for 2022. Note: For 2022, the maximum § 179 is $1,080,000 and the threshold amount is $2,700,000. If an amount is zero, enter "0". Enter amounts as positive numbers. Form 4562 Department of the Treasury Internal Revenue Service Name(s) shown on return Javier Sanchez Part I 1 2 3 Depreciation and Amortization (Including Information on Listed Property) Attach to your tax return. 2022 Attachment for instructions and the latest Sequence information. No. 179 Business or activity to which this form relates Sanchez Landscaping, LLC Election To Expense Certain Property Under Section 179 Note: If you have any listed property, complete Part V before you complete Part I. Maximum amount (see instructions) Total cost of section 179 property placed in service (see instructions). Threshold cost of section 179 property before reduction in limitation (see instructions) Identifying number 123-45-6789 1 OMB No. 1545-0172 2 3

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q