3. MACRS Compute allowable MACRS, section 179 and special first year write off for Queen Corp....

3. MACRS

Compute allowable MACRS, section 179 and special first year write off for Queen Corp. (QC) for 2016, 2017, 2018, 2018 and 2019. Compute gain/loss on widget sold in 2019.

In 2016 QC purchased a Framus (ten-year item) for $3 million. QC mad no special elections for 2016.

In 2017 QC purchased four widgets (five-year) items for 450,000 each, QC declined special first year write off only.

Expert Solution

2016 depreciation:

	(a)		(b)	(a) X (b)
Property	MACRS Basis	Recovery period	Depreciation Rate	MACRS depreciation
Framus	$ 3,000,000	10 year	10.00%	$ 300,000.00

2017 depreciation:

Section 179 deduction = 500,000

balance widgets basis = 450,000*4 - 500,000 = 1,750,000

MACRS depreciation:

	(a)		(b)	(a) X (b)
Property	MACRS Basis	Recovery period	Depreciation Rate	MACRS depreciation
Framus	$ 3,000,000	10 year	18.00%	$ 540,000.00
Widgets	$ 1,750,000	5 year	20.00%	$ 350,000.00
Cost recovery				$ 890,000.00

2018 depreciation:

	(a)		(b)	(a) X (b)
Property	MACRS Basis	Recovery period	Depreciation Rate	MACRS depreciation
Framus	$ 3,000,000	10 year	14.40%	$ 432,000.00
Widgets	$ 1,750,000	5 year	32.00%	$ 560,000.00
Cost recovery				$ 992,000.00

2019 depreciation:

	(a)		(b)	(a) X (b)
Property	MACRS Basis	Recovery period	Depreciation Rate	MACRS depreciation
Framus	$ 3,000,000	10 year	11.52%	$ 345,600.00
Widgets	$ 1,750,000	5 year	19.20%	$ 336,000.00
Cost recovery				$ 681,600.00

ekkarill92 answered 1 year ago

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