property_transactions_solutions

property_transactions_solutions - Topic: Cost recovery...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Topic: Cost recovery & property transactions – Solution Part 1: Cost recovery . The Knight Corporation purchases machinery (five-year property class) on February 17, 2009 at a cost of $600,000. Required: Compute Knight’s cost recovery for 2009-2014 assuming that it is “new” machinery & Knight wants to minimize their taxable income in 2009. Year Total 2009 Sec. 179 $250,000 50% bonus depreciation ($600,000 – $250,000) x 50% $175,000 MACRS cost recovery ($600,000 – $250,000 – $175,000) x 20% $35,000 $460,000 2010 MACRS cost recovery ($600,000 – $250,000 – $175,000) x 32% $56,000 2011 MACRS cost recovery ($600,000 – $250,000 – $175,000) x 19.2% $33,600 2012 MACRS cost recovery ($600,000 – $250,000 – $175,000) x 11.52% $20,160 2013 MACRS cost recovery ($600,000 – $250,000 – $175,000) x 11.52% $20,160 2014 MACRS cost recovery ($600,000 – $250,000 – $175,000) x 5.76% $10,080 Total cost recovery $600,000 Part 2: Disposal of Sec. 1231 property and Sec. 1245 recapture . The Patriot Company (a sole proprietorship) sold four assets in 2010. The gains and losses are summarized in the table below. Required
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

property_transactions_solutions - Topic: Cost recovery...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online