Back in Boston Steve has been busy creating and managing his

Back in Boston, Steve has been busy creating and managing his new company, Teton Mountaineering (TM), which is based out of a small town in Wyoming. In the process of doing so, TM has acquired various types of assets. Below is a list of assets acquired during 2016: Exhibit 10-8 (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Round intermediate calculations and final answer to the nearest whole dollar amount.)

* Not considered a luxury automobile, thus not subject to the luxury automobile limitations.

During 2016, TM had huge success (and had no §179 limitations) and Steve acquired more assets the next year to increase its production capacity. These are the assets acquired during 2017:

^†Used 100% for business purposes.

TM generated taxable income in 2017 of $732,500 for purposes of computing the §179 expense.

a. Compute the maximum 2016 depreciation deductions including §179 expense (ignoring bonus depreciation).

b. Compute the maximum 2017 depreciation deductions including §179 expense (ignoring bonus depreciation).

c. Compute the maximum 2017 depreciation deductions including §179 expense, but now assume that Steve would like to take bonus depreciation on the 2017 assets.

d. Ignoring part c, now assume that during 2017, Steve decides to buy a competitor’s assets for a purchase price of $350,000. Compute the maximum 2017 cost recovery including §179 expense (ignoring bonus depreciation). Steve purchased the following assets for the lump-sum purchase price.

Solution

B) 2017 Depreciation is $529387

total expense = machinery + used delivery truck + computers & info. systems + luxury auto + assembly equipment +storage building

= 17143 + 4800 + 34000 + 11160 + 475000 + 1284 = $543387