Back in Boston, Steve has been busy creating and managing hisnew company, Teton Mountaineering (TM), which is based out of asmall town in Wyoming. In the process of doing so, TM has acquiredvarious types of assets. Below is a list of assets acquired during2016: Exhibit 10-8 (Use MACRS Table 1, Table 2, Table 3, Table 4and Table 5.) (Round intermediate calculations and finalanswer to the nearest whole dollar amount.)
| Asset | Cost | Date Placed in Service |
| Office furniture | $ | 10,000 | 02/03/2016 |
| Machinery | | 560,000 | 07/22/2016 |
| Used delivery truck* | | 15,000 | 08/17/2016 |
|
* Not considered a luxury automobile, thus not subject to theluxury automobile limitations.
During 2016, TM had huge success (and had no §179 limitations)and Steve acquired more assets the next year to increase itsproduction capacity. These are the assets acquired during 2017:
| | Date Placed |
| Asset | Cost | in Service |
| Computers & info. system | $ | 40,000 | 03/31/2017 |
| Luxury auto† | | 80,000 | 05/26/2017 |
| Assembly equipment | | 475,000 | 08/15/2017 |
| Storage building | | 400,000 | 11/13/2017 |
|
†Used 100% for business purposes.
TM generated taxable income in 2017 of $732,500 for purposes ofcomputing the §179 expense.
a. Compute the maximum 2016 depreciationdeductions including §179 expense (ignoring bonusdepreciation).
b. Compute the maximum 2017 depreciationdeductions including §179 expense (ignoring bonusdepreciation).
c. Compute the maximum 2017 depreciationdeductions including §179 expense, but now assume that Steve wouldlike to take bonus depreciation on the 2017 assets.
d. Ignoring part c, now assume that during2017, Steve decides to buy a competitor’s assets for a purchaseprice of $350,000. Compute the maximum 2017 cost recovery including§179 expense (ignoring bonus depreciation). Steve purchased thefollowing assets for the lump-sum purchase price.
| | Date Placed |
| Asset | Cost | in Service |
| Inventory | $ | 20,000 | 09/15/2017 |
| Office furniture | | 30,000 | 09/15/2017 |
| Machinery | | 50,000 | 09/15/2017 |
| Patent | | 98,000 | 09/15/2017 |
| Goodwill | | 2,000 | 09/15/2017 |
| Building | | 130,000 | 09/15/2017 |
| Land | | 20,000 | 09/15/2017 |
|
