Homework Set 3 Solution

Homework Set 3 Solution - Tax 4001 2011/2012 Homework Set#3...

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Tax 4001 2011/2012 Homework Set #3 Solution PAGE 1 #1 Cost 40,000 Statutory % 20% MACRS Calculated 8,000 Times Business-Use % 80% MACRS ALLOWED 6,400 2011 YEAR ONE AUTO LIMIT 3,060 Times Business-Use % 80% PASSENGER AUTO LIMIT \$2,448 2009 cost recovery limited to \$2,448. #2 a. 400,000 20% 2010 Cost Recovery 80,000 b. 400,000 MACRS Cost Recovery 32% 1/2 year because sold 50% 2011 Cost Recovery 64,000 #3 Lesser of QPAI or TI 3,100,000 Times DPAD Percentage 9% DPAD 279,000 Limited to: 50% of Qualifying W-2 wages 215,000 Therefore Tony Inc can only take a DPAD of \$215,000. #4 Total Cost 1,800,000 Less: Land (350,000) Apt Bldg cost 1,450,000 a. 2011 1,450,000 depreciation percentage 1.970% allowed cost recovery 28,565 b. 2016 1,450,000 depreciation percentage 3.636% mid-month convention 0.88 10.5/12 months allowed cost recovery 46,132 c. Purchase Price 1,800,000 less 2011 deprec (28,565) less 2012 - 2015 deprec (210,888) 1,450,000 * .03636 * 4 years less 2016 deprec (46,132) Adjusted Basis 1,514,415 d. Sale Price 2,300,000 Less: Adjusted Basis (1,514,415) Gain on Sale \$785,585

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Tax 4001 2011/2012 Homework Set #3 Solution PAGE 2 #5 a. 2011 1,450,000 depreciation percentage 1.391% allowed cost recovery 20,170 b. 2016 1,450,000 depreciation percentage 2.564% mid-month convention 0.88 10.5/12 months allowed cost recovery 32,531 c. Purchase Price 1,800,000
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