Assume that Timberline Corporation has 2018 taxable income of $278,000 for purposes of computing the...
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Accounting
Assume that Timberline Corporation has 2018 taxable income of $278,000 for purposes of computing the 179 expense. It acquired the following assets in 2018: (Use MACRS Table 1, Table 2, Table 3, Table 4and Table 5.)
Asset
Purchase Date
Basis
Furniture (7-year)
December 1
$
488,000
Computer equipment (5-year)
February 28
128,000
Copier (5-year)
July 15
68,000
Machinery (7-year)
May 22
518,000
Total
$
1,202,000
a-1. What is the maximum amount of 179 expense Timberline may deduct for 2018?
a-2. What is Timberlines 179 carryforward to 2019, if any?
b. What would Timberlines maximum depreciation deduction be for 2018 assuming no bonus depreciation? (Round your intermediate calculations to the nearest whole dollar amount.)
c. What would Timberlines maximum depreciation deduction be for 2018 if the machinery cost $3,380,000 instead of $518,000 and assuming no bonus depreciation? (Round your intermediate calculations to the nearest whole dollar amount.
Table 1 MACRS Half-Year Convention
Depreciation Rate for Recovery Period
3-Year
5-Year
7-Year
10-Year
15-Year
20-Year
Year 1
33.33%
20.00%
14.29%
10.00%
5.00%
3.750%
Year 2
44.45
32.00
24.49
18.00
9.50
7.219
Year 3
14.81
19.20
17.49
14.40
8.55
6.677
Year 4
7.41
11.52
12.49
11.52
7.70
6.177
Year 5
11.52
8.93
9.22
6.93
5.713
Year 6
5.76
8.92
7.37
6.23
5.285
Year 7
8.93
6.55
5.90
4.888
Year 8
4.46
6.55
5.90
4.522
Year 9
6.56
5.91
4.462
Year 10
6.55
5.90
4.461
TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter
Depreciation Rate for Recovery Period
5-Year
7-Year
Year 1
35.00%
25.00%
Year 2
26.00
21.43
Year 3
15.60
15.31
Year 4
11.01
10.93
Year 5
11.01
8.75
Year 6
1.38
8.74
Year 7
8.75
Year 8
1.09
TABLE 2b MACRS Mid-Quarter Convention: For property placed in service during the second quarter
Depreciation Rate for Recovery Period
5-Year
7-Year
Year 1
25.00%
17.85%
Year 2
30.00
23.47
Year 3
18.00
16.76
Year 4
11.37
11.97
Year 5
11.37
8.87
Year 6
4.26
8.87
Year 7
8.87
Year 8
3.34
TABLE 2c MACRS Mid-Quarter Convention: For property placed in service during the third quarter
Depreciation Rate for Recovery Period
5-Year
7-Year
Year 1
15.00%
10.71%
Year 2
34.00
25.51
Year 3
20.40
18.22
Year 4
12.24
13.02
Year 5
11.30
9.30
Year 6
7.06
8.85
Year 7
8.86
Year 8
5.53
TABLE 2d MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter
Depreciation Rate for Recovery Period
5-Year
7-Year
Year 1
5.00%
3.57%
Year 2
38.00
27.55
Year 3
22.80
19.68
Year 4
13.68
14.06
Year 5
10.94
10.04
Year 6
9.58
8.73
Year 7
8.73
Year 8
7.64
TABLE 3 Residential Rental Property Mid-Month Convention Straight Line27.5 Years
Month Property Placed in Service
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Year 1
3.485%
3.182%
2.879%
2.576%
2.273%
1.970%
1.667%
1.364%
1.061%
0.758%
0.455%
0.152%
Year 2-9
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
3.636
Year 10
3.637
3.637
3.637
3.637
3.637
3.637
3.636
3.636
3.636
3.636
3.636
3.636
Year 11
3.636
3.636
3.636
3.636
3.636
3.636
3.637
3.637
3.637
3.637
3.637
3.637
Year 12
3.637
3.637
3.637
3.637
3.637
3.637
3.636
3.636
3.636
3.636
3.636
3.636
Year 13
3.636
3.636
3.636
3.636
3.636
3.636
3.637
3.637
3.637
3.637
3.637
3.637
Year 14
3.637
3.637
3.637
3.637
3.637
3.637
3.636
3.636
3.636
3.636
3.636
3.636
TABLE 4 Nonresidential Real Property Mid-Month Convention Straight Line31.5 Years (for assets placed in service before May 13, 1993)
Month Property Placed in Service
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Year 1
3.042%
2.778%
2.513%
2.249%
1.984%
1.720%
1.455%
1.190%
0.926%
0.661%
0.397%
0.132%
Year 2-7
3.175
3.175
3.175
3.175
3.175
3.175
3.175
3.175
3.175
3.175
3.175
3.175
Year 8
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.175
3.175
3.175
3.175
3.175
Year 9
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
Year 10
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
Year 11
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
TABLE 5 Nonresidential Real Property Mid-Month Convention Straight Line39 Years (for assets placed in service on or after May 13, 1993)
Month Property Placed in Service
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Year 1
2.461%
2.247%
2.033%
1.819%
1.605%
1.391%
1.177%
0.963%
0.749%
0.535%
0.321%
0.107%
Year 239
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
2.564
Year 40
0.107
0.321
0.535
0.749
0.963
1.177
1.391
1.605
1.819
2.033
2.247
2.461
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