What MACRS and ADS cost recovery catergory would leasehold improvements fall under for tax depreciation? Please...

What MACRS and ADS cost recovery catergory would leasehold improvements fall under for tax depreciation? Please provide explanation

Expert Solution

Leasehold Improvements is 15 year MACRS property with a 15 yar recovery period if place in service before 2018.Applicable depreciation method is Straight Line.Leasehold Improvement of type as in Section 1245 qualify for a shoerter recovery period ( 5 or 7 years).A 39-year recovery period applies to 15-year qualified leasehold improvement property placed in service before 2018 if ADS is elected. A 40-year ADS recovery period applies to improvements to nonresidential real property and residential real property that do not qualify for a 15-year recovery period. However, a 30 year ADS period applies to improvements to residential rental property if ADS is elected and the improvement is placed in service after 2017.Whether or not ADS is elected, the applicable convention for 15-year qualified improvement property and 15-year qualified leasehold improvement property is the half-year convention unless the mid-quarter convention applies and the applicable convention for 39-year real property and 27.5-year residential rental property is the mid-month convention.

ekkarill92 answered 1 year ago

What are the differences in depreciation, cost recovery, amortization, and depletion. Discuss MACRS

The Internal Revenue Code (IRS) uses the Modified Cost Recovery System (MACRS) to compute depreciation for...

The Internal Revenue Code (IRS) uses the Modified Cost Recovery System (MACRS) to compute depreciation for tax purposes. Depreciation under MACRS is similar to that computed under the double-declining-balance method. Initial Post Begin by reading the prompt Answer the following questions: How might the MACRS system be beneficial for tax purposes for individuals and/or businesses? Why would businesses utilize straight-line depreciation for their financial statements and MACRS for their tax accounting?

Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery...

Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year* Recovery year 3 years 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% Totals 100% 100% 100% 100% A firm is considering renewing its equipment to...

- What is a modified accelerated cost recovery system (MACRS)? Speculate as to why this system...

- What is a modified accelerated cost recovery system (MACRS)? Speculate as to why this system is now required for tax purposes.

How is the MACRS depreciation method under IRS rules different from the straight-line depreciation allowed under...

How is the MACRS depreciation method under IRS rules different from the straight-line depreciation allowed under GAAP rules? What is the implication on incremental after-tax free cash flows from firms’ investments?

Consider the tax depreciation for a $50,000 investment using both the Modified Accelerated Cost Recovery System...

Consider the tax depreciation for a $50,000 investment using both the Modified Accelerated Cost Recovery System (MACRS) and the Sum-of-Years’ Digits depreciation accounting systems. Show which system is more beneficial economically. Use a 5-year tax life. The corporate MARR is 25%, and the tax rate is 40%.(show work and formulas)

Tax Depreciation Lab Assignment: Prepare an excel Spreadsheet to calculate MACRS depreciation on the following assets....

Tax Depreciation Lab Assignment: Prepare an excel Spreadsheet to calculate MACRS depreciation on the following assets. Use the MACRS tables to look up the proper % to use for depreciation each year. Business Assets: Date Item Purchased Amount Bus. Use Life Truck 2/05/17 $28,000 100% 5 yr. Mower 2 3/08/17 12,000 100% 7 yr Seeder 3/01/16 3,400 100% 7 yr Equipment 6/25/16 1,595 100% 7 yr Laptop 5/18/16 ...

Table: Rounded Depreciation Percentage by Recovery Year Using MACRS for First Four Property Classes Percentage by...

Table: Rounded Depreciation Percentage by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45 32 25 18 3 15 19 18 14 4 7 12 12 12 5 12 9 9 6 5 9 8 7 9 7 8 4 6 9 6 10 6 11 4 Total 100% 100% 100% 100% a. Determine the after-tax cash outflows of...

Two alternatives with the cash flow described below. MACRS depreciation and 5years MACRS Incremental tax rate=24%...

Two alternatives with the cash flow described below. MACRS depreciation and 5years MACRS Incremental tax rate=24% After tax MARR= 10% A B Initial cost 11,000 33,000 Uniform Annual Benefits 3,000 9,000 Salvage Value 2,000 5,000 Life(years) 5 5 Find the alternative to choiisw, after cinsidering taxes

An asset with a first cost of $9000 is depreciated using 5-year MACRS recovery. The CFBT...

An asset with a first cost of $9000 is depreciated using 5-year MACRS recovery. The CFBT is estimated at $10,000 for the first 4 years and $5000 thereafter as long as the asset is retained. The effective tax rate is 40%, and money is worth 10% per year. In present worth dollars, how much of the cash flow generated by the asset over its recovery period is lost to taxes?

Question