eBookQuestion Content AreaProblem 8-12Modified Accelerated Cost Recovery System (MACRS), Listed Property, Limitation on Depreciation of Luxury Automobiles (LO 8.2, 8.4, 8.5)During 2021, Pepe Guardio purchases the following property for use in his calendar year-end manufacturing business:ItemDate AcquiredCostManufacturing equipment (7 year)June 2$50,000Office furnitureSeptember 158,000Office computerNovember 182,000Passenger automobile (used 85 percent for business)May 3155,000WarehouseJuly 23 Building 170,000 Land 135,000Pepe uses the accelerated depreciation method under MACRS and takes bonus depreciation.Complete Form 4562, Depreciation and Amortization to determine the depreciation expense.If required, round your answers to the nearest dollar. If an amount is zero, enter "0". Enter amounts as positive numbers.Click here to access the depreciation tables and here to view Table 8.1: Recovery Periods for Assets Placed in Service After 1986 and Annual automobile depreciation limitations. 0d 10-year propertye 15-year propertyf 20-year propertyg 25-year propertyh Residential rentalpropertyi Nonresidential real 07/21propertyS/LS/LS/LS/LMMS/LSection C-Assets Placed in Service During 2021 Tax Year Using the Alternative Depreciation SystemS/LS/LS/LS/L20a Class lifeb 12-yearc 30-yeard 40-yearPart IV Summary (See instructions.)25 yrs.27.5 yrs.27.5 yrs.39 yrs.170,000 ✓12 yrs.30 yrs.40 yrs.23 For assets shown above and placed in service during the current year, enter the portion of the basisattributable to section 263A costs....For Paperwork Reduction Act Notice, see separate instructions.MMCat. No. 12906NMMMMMM21 Listed property. Enter amount from line 2822 Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on theappropriate lines of your return. Partnerships and S corporations-see instructions..MM2321222,001135,000 X230,000 XForm 4562 (2021) Section A-Depreciation and Other Information (Caution: See the instructions for limits for passenger automobiles.)24a Do you have evidence to support the business/investment use claimed? Yes No24b If "Yes," is the evidence written? Yes No(a)(b)(d)(f)(g)(h)Business/Type of property (list vehicles Date placed in investment Cost or otherfirst)serviceusebasispercentage2526Passenger automobile2728✓05/21Property used more than 50% in a qualified business use:0%이85 ✓%✔(c)Special depreciation allowance for qualified listed property placed in serviceduring the tax year and used more than 50% in a qualified business use. Seeinstructions ........%%(e)Basis fordepreciation(business/investment useonly)%%55,000 ✓Property used 50% or less in a qualified business use:Recoveryperiod46,750 X 5 yrs.Method/ConventionS/L -S/L -S/L-Add amounts in column (h), lines 25 through 27. Enter here and on line 21, page 1 ...✓ HY25✔28Depreciationdeduction0 X055,000 X(i)Electedsection179 cost0

The solution is based on the MACRS general depreciation system (GDS), and all assets are non-farm…

Answered: Problem 8-12 Modified Accelerated Cost…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Question Content Area

Problem 8-12
Modified Accelerated Cost Recovery System (MACRS), Listed Property, Limitation on Depreciation of Luxury Automobiles (LO 8.2, 8.4, 8.5)

During 2021, Pepe Guardio purchases the following property for use in his calendar year-end manufacturing business:

*Item*	*Date Acquired*	*Cost*
Manufacturing equipment (7 year)	June 2	$50,000
Office furniture	September 15	8,000
Office computer	November 18	2,000
Passenger automobile (used 85 percent for business)	May 31	55,000
Warehouse	July 23
Building		170,000
Land		135,000

Pepe uses the accelerated depreciation method under MACRS and takes bonus depreciation.

Complete Form 4562, Depreciation and Amortization to determine the depreciation expense.

If required, round your answers to the nearest dollar. If an amount is zero, enter "0". Enter amounts as positive numbers.

Click here to access the depreciation tables and here to view Table 8.1: Recovery Periods for Assets Placed in Service After 1986 and Annual automobile depreciation limitations.

0
d 10-year property
e 15-year property
f 20-year property
g 25-year property
h Residential rental
property
i Nonresidential real 07/21
property
S/L
S/L
S/L
S/L
MM
S/L
Section C-Assets Placed in Service During 2021 Tax Year Using the Alternative Depreciation System
S/L
S/L
S/L
S/L
20a Class life
b 12-year
c 30-year
d 40-year
Part IV Summary (See instructions.)
25 yrs.
27.5 yrs.
27.5 yrs.
39 yrs.
170,000 ✓
12 yrs.
30 yrs.
40 yrs.
23 For assets shown above and placed in service during the current year, enter the portion of the basis
attributable to section 263A costs....
For Paperwork Reduction Act Notice, see separate instructions.
MM
Cat. No. 12906N
MM
MM
MM
21 Listed property. Enter amount from line 28
22 Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on the
appropriate lines of your return. Partnerships and S corporations-see instructions..
MM
23
21
22
2,001
135,000 X
230,000 X
Form 4562 (2021)

Section A-Depreciation and Other Information (Caution: See the instructions for limits for passenger automobiles.)
24a Do you have evidence to support the business/investment use claimed? Yes No
24b If "Yes," is the evidence written? Yes No
(a)
(b)
(d)
(f)
(g)
(h)
Business/
Type of property (list vehicles Date placed in investment Cost or other
first)
service
use
basis
percentage
25
26
Passenger automobile
27
28
✓05/21
Property used more than 50% in a qualified business use:
0%이
85 ✓
%
✔
(c)
Special depreciation allowance for qualified listed property placed in service
during the tax year and used more than 50% in a qualified business use. See
instructions ........
%
%
(e)
Basis for
depreciation
(business/
investment use
only)
%
%
55,000 ✓
Property used 50% or less in a qualified business use:
Recovery
period
46,750 X 5 yrs.
Method/
Convention
S/L -
S/L -
S/L-
Add amounts in column (h), lines 25 through 27. Enter here and on line 21, page 1 ...
✓ HY
25
✔
28
Depreciation
deduction
0 X
0
55,000 X
(i)
Elected
section
179 cost
0

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