346Lec05 - Sec 168 179 Assumptions Type Cost Life Date Discount Machinery $ 215,000 5 1-Feb-14 10 Cost Recovery 1 Straight-Line(ADS MACRS(168(b 179

346Lec05 - Sec 168 179 Assumptions Type Cost Life Date...

This preview shows page 1 - 2 out of 4 pages.

Sec 168 & 179 Assumptions Type Machinery Cost $ 215,000 86000 Life 5 Date 1-Feb-14 Discount % 10% Cost Recovery- 1 No Additional First-Year Depreciation Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Straight-Line (ADS) $21,500 $43,000 $43,000 $43,000 $43,000 $21,500 $215,000 $43,000 $68,800 $41,280 $24,768 $24,768 $12,384 $215,000 §179 $0 $0 $0 $0 $0 $0 $0 §168(k) $0 $0 $0 $0 $0 $0 $0 $43,000 (shifts to S.L. at mid-point of asset's life) $215,000 Cost Recovery- 2 Cost $800,000 - §179 Additional First Year ($500,000) $300,000 - §168(k) "Bonus" ($150,000) MACRS base $150,000 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $30,000 $48,000 $28,800 $17,280 $17,280 $8,640 $150,000 §179 $500,000 $0 $0 $0 $0 $0 $500,000 - §168(k) "Bonus" $150,000 $0 $0 $0 $0 $0 $150,000 $680,000 $800,000 Cost Recovery- 3 Cost $215,000 - §179 Additional First Year ($115,000) $100,000 - §168 "Bonus" $0 MACRS base $100,000 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $20,000 $32,000 $19,200 $11,520 $11,520 $5,760 $100,000 §179 $115,000 $0 $0 $0 $0 $0 $115,000 §168(k) $0 $0 $0 $0 $0 $0 $0 $135,000 $215,000 Taxpayer #1 PV 1 2 3 4 5 6 $43,000 $68,800 $41,280 $24,768 $24,768 $12,384 $215,000 §179 $0 $0 $0 $0 $0 $0 $0 §168(k) $0 $0 $0 $0 $0 $0 $0 Annual Deduction $43,000 $68,800 $41,280 $24,768 $24,768 $12,384 $215,000 Marginal Tax Rate 15% 15% 25% 34% 34% 34% ` $6,450 $10,320 $10,320 $8,421 $8,421 $4,211 NPV- Tax Benefits $35,503 $5,864 $8,529 $7,754 $5,752 $5,229 $2,377 Taxpayer #2 PV 1 2 3 4 5 6 $43,000 $68,800 $41,280 $24,768 $24,768 $12,384 $215,000 §179 $0 $0 $0 $0 $0 $0 $0 §168(k) $0 $0 $0 $0 $0 $0 $0 Annual Deduction $43,000 $68,800 $41,280 $24,768 $24,768 $12,384 $215,000 Marginal Tax Rate 34% 34% 34% 25% 15% 15% After-Tax Wealth
Image of page 1
Image of page 2

You've reached the end of your free preview.

Want to read all 4 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes