Question

Problem 4

According to the Internal Revenue Code, bonus depreciation under §168(k) is mandatory.  Explain.

Problem 5

Joseph Enterprises purchased twelve desktop computers for business use.  Each computer cost $1,350.  As you recommended, Joseph Enterprises purchased each computer separately.  Explain.

Answer 1

Problem 4:

Section 168(k) allows a taxpayer to take an additional first year depreciation deduction in the placed-in-service year of qualified property. In order to be eligible for the 100% bonus depreciation, your property must meet four key requirements:

• The depreciable property must be of a specific type: Your property must have a recovery period of 20 years or less.
• The property must be “new” to you: The property is “new” if the original use of the property begins with the taxpayer.The property is “new to you” if neither you, nor a related party, had a previously depreciable interest in the property.
• The placed-in-service date of the property must be after September 27, 2017.
• The property must be acquired after September 27, 2017.

If your property meets all these requirements ,it is madatory to claim bonus depreciation.

Problem 5:

Desktop computers purchased for business use is a deductable expense.you can deduct entire cost in first year itself as per section 179.If you use an item for business less than half the time, it won't qualify for Section 179 and you will have to deduct the cost a portion at a time over several years which iscalled depreciation.