Question

On June 5, 2017, Javier Sanchez purchased and placed in service a 7-year class asset costing $560,000 for use in his landscaping business, which he operates as a single member LLC (Sanchez Landscaping LLC). During 2017, his business generated a net income of $945,780 before any § 179 immediate expense election. Determine the maximum deductions (including first year additional depreciation) that Javier Sanchez can claim with respect to this asset in 2017 and 2018. 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. The maximum § 179 for 2017 is $510,000 and the reduction threshold is $2,030,000.a. Javier Sanchez's total cost recovery deduction in 2017 is $_____ and $_____ in 2018 .b. Complete Javier's Form 4562 (page 1) for 2017. If an amount is zero, enter "0". Enter amounts as positive numbers.

Answer 1

Answer:

A.$538,573 and $6,123

B.Check below

Explanation:

A.

Sanchez's total cost recovery deduction in 2017 is $538,573 and $6,123

B.

Section 179 expense$510,000

Additional first-year depreciation 25,000

[($560,000 – $510,000) × .50]

($50,000×.50)

2017 Cost recovery (MACRS ) 3,573

[($560,000 – $510,000 – $25,000) × .1429

(25,000×.1429)

2017 Total deduction$538,573

($510,000+$25,000+$3,573)

2018 Cost recovery (MACRS ) 6,123

[($560,000 – $510,000 – $25,000) × .2449

(25,000×.2449)