Please use the following fact pattern to complete a C-Corporation Tax Return for the 2018 tax year using the ProConnect Tax software. Please give us Depreciation Schedule for the following.
Assets & Depreciation
For purposes of determining any book depreciation, assume BB takes a full year of depreciation in the first and last year on a straight line basis with no salvage value and uses the same class life for book and tax.
Assets Place into Service in 2016: BB purchased furnishings and other equipment in 2016 for $571,755 that were all 7 year property and the half-year convention applied. BB elected not to take bonus depreciation or 179 deductions on those assets, because its taxable income was negligible in that year. BBs total combined MACRS depreciation from this equipment in 2016 and 2017 was $221,726 and its book depreciation was $163,359.
Assets Placed into Service in 2018: BB anticipates increasing its revenues substantially in future years, particularly 5 years from now when a current distribution agreement for its training materials expires. Consequently, BB does not want to take bonus depreciation on any newly acquired assets with class lives longer than 5 years, but bonus depreciation may be taken on any assets with class lives of 5 years or less that qualify.
BB purchased and placed into service the following business assets in 2018. BB purchased an inventory management system that consists of computer hardware costing $500,000 (5 year class life) and an order processing machine that cost $2,800,000 (7 year class life for book and tax). These assets were placed into service on March 1st.
Trade-In of Vehicle: BB also traded in its old delivery truck for a new delivery truck (both 5 year class life assets) on November 1st and immediately placed the new truck into service. The new truck cost $35,000, but BB received $10,000 of credit on the trade-in of the old vehicle and paid the remaining $25,000 in cash. The old vehicle was a 5 year asset that was acquired in the first quarter of 2017 and its original basis was $30,000. BB used the mid-quarter convention in 2017 and the total tax depreciation on the old vehicle from prior years was $18,300.
Assets & Depreciation
For purposes of determining any book depreciation, assume BB takes a full year of depreciation in the first and last year on a straight line basis with no salvage value and uses the same class life for book and tax.
Assets Place into Service in 2016: BB purchased furnishings and other equipment in 2016 for $571,755 that were all 7 year property and the half-year convention applied. BB elected not to take bonus depreciation or 179 deductions on those assets, because its taxable income was negligible in that year. BBs total combined MACRS depreciation from this equipment in 2016 and 2017 was $221,726 and its book depreciation was $163,359.
Assets Placed into Service in 2018: BB anticipates increasing its revenues substantially in future years, particularly 5 years from now when a current distribution agreement for its training materials expires. Consequently, BB does not want to take bonus depreciation on any newly acquired assets with class lives longer than 5 years, but bonus depreciation may be taken on any assets with class lives of 5 years or less that qualify.
BB purchased and placed into service the following business assets in 2018. BB purchased an inventory management system that consists of computer hardware costing $500,000 (5 year class life) and an order processing machine that cost $2,800,000 (7 year class life for book and tax). These assets were placed into service on March 1st.
Trade-In of Vehicle: BB also traded in its old delivery truck for a new delivery truck (both 5 year class life assets) on November 1st and immediately placed the new truck into service. The new truck cost $35,000, but BB received $10,000 of credit on the trade-in of the old vehicle and paid the remaining $25,000 in cash. The old vehicle was a 5 year asset that was acquired in the first quarter of 2017 and its original basis was $30,000. BB used the mid-quarter convention in 2017 and the total tax depreciation on the old vehicle from prior years was $18,300.
