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Casper used the following assets in his Schedule C trade or business in the tax year 2023. Casper is a new client and does not have a copy of his prior year's tax return. He recalls that all of the assets purchased in prior years used MACRS depreciation. Casper does not wish to take a \[tex]$179 expense or bonus.

Required:
Calculate the current-year depreciation allowance for Casper's business.
Note: Round your final answers to the nearest whole dollar amount.

| Asset | Date Purchased | Date Sold | Business Use | Cost | Method | 2023 Expense |
|--------------|----------------|----------------|--------------|---------|------------|--------------|
| Computer 1 | 03/12/2020 | | 100% | \$[/tex]3,000 | 5 year MACRS| |
| Computer 2 | 05/05/2020 | 05/15/2023 | 100% | \[tex]$2,500 | 5 year MACRS| |
| Printer | 08/25/2023 | | 100% | \$[/tex]2,200 | 5 year MACRS| |
| Computer 3 | 05/25/2023 | | 100% | \[tex]$2,800 | 5 year MACRS| |
| Equipment | 03/20/2021 | | 100% | \$[/tex]2,700 | 7 year MACRS| |
| Auto | 05/01/2023 | | 90% | \[tex]$20,000| 5 year MACRS| |
| Furniture 1 | 02/12/2021 | 08/25/2023 | 100% | \$[/tex]22,000| 7 year MACRS| |
| Furniture 2 | 08/15/2021 | | 100% | \[tex]$3,600 | 7 year MACRS| |
| Office Building| 04/01/2023 | | 100% | \$[/tex]330,000| 39 SL | |

Use Table 6A-1 and Table 6A-8.

Sagot :

GinnyAnswer
To calculate the current-year depreciation allowance for Casper's business, we will detail the calculation of the depreciation for the reported assets. The following items and their relevant details are given:

1. Computer 1
- Date Purchased: 03/12/2020
- Business Use: 100%
- Cost: \[tex]$3,000 - Method: 5 year MACRS 2. Computer 2 - Date Purchased: 05/05/2020 - Date Sold: 05/15/2023 - Business Use: 100% - Cost: \$[/tex]2,500
- Method: 5 year MACRS

3. Printer
- Date Purchased: 08/25/2023
- Business Use: 100%
- Cost: \[tex]$2,200 - Method: 5 year MACRS 4. Computer 3 - Date Purchased: 05/25/2023 - Business Use: 100% - Cost: \$[/tex]2,800
- Method: 5 year MACRS

5. Equipment
- Date Purchased: 03/20/2021
- Business Use: 100%
- Cost: \[tex]$2,700 - Method: 7 year MACRS 6. Auto - Date Purchased: 05/01/2023 - Business Use: 90% - Cost: \$[/tex]20,000
- Method: 5 year MACRS

7. Furniture 1
- Date Purchased: 02/12/2021
- Date Sold: 08/25/2023
- Business Use: 100%
- Cost: \[tex]$22,000 - Method: 7 year MACRS 8. Furniture 2 - Date Purchased: 08/15/2021 - Business Use: 100% - Cost: \$[/tex]3,600
- Method: 7 year MACRS

9. Office Building
- Date Purchased: 04/01/2023
- Business Use: 100%
- Cost: \[tex]$330,000 - Method: 39 SL We will now calculate the 2023 depreciation for each asset based on the provided information. 1. Computer 1: - Purchase Year: 2020 - Age in 2023: 3 years - Using the 5 year MACRS table, the depreciation rate for the 3rd year is approximately 0.192. - Depreciation: \(3,000 \times 0.192 = \$[/tex]576\)

2. Computer 2:
- Purchase Year: 2020
- Sold in 2023. Prorate for year of sale.
- Age in 2023 (reduced by 1 year for prorating): 2 years
- Using the 5 year MACRS table, the depreciation rate for the 2nd year is approximately 0.32.
- Depreciation: [tex]\(2,500 \times 0.32 = \$800\)[/tex]

3. Printer:
- Purchase Year: 2023
- Age in 2023: 0 years
- Using the 5 year MACRS table, the depreciation rate for the 1st year is approximately 0.2.
- Depreciation: [tex]\(2,200 \times 0.0576 (prorate first year) = \$126.72\)[/tex]

4. Computer 3:
- Purchase Year: 2023
- Age in 2023: 0 years
- Using the 5 year MACRS table, the depreciation rate for the 1st year is approximately 0.2.
- Depreciation: [tex]\(2,800 \times 0.0576 (prorate first year) = \$161.28\)[/tex]

5. Equipment:
- Purchase Year: 2021
- Age in 2023: 2 years
- Using the 7 year MACRS table, the depreciation rate for the 2nd year is approximately 0.2449.
- Depreciation: [tex]\(2,700 \times 0.2449 = \$661.23\)[/tex]

6. Auto:
- Purchase Year: 2023
- Age in 2023: 0 years
- Business Use: 90%
- Using the 5 year MACRS table, the depreciation rate for the 1st year is approximately 0.2.
- Depreciation [tex]\(20,000 \times 0.0576 (prorate first year) \times 0.90 = \$1,036.80\)[/tex]

7. Furniture 1:
- Purchase Year: 2021
- Sold in 2023. Prorate for year of sale.
- Age in 2023 (reduced by 1 year for prorating): 1 year
- Using the 7 year MACRS table, the depreciation rate for the 1st year is approximately 0.1429.
- Depreciation: [tex]\(22,000 \times 0.1429 = \$3,143.80\)[/tex]

8. Furniture 2:
- Purchase Year: 2021
- Age in 2023: 2 years
- Using the 7 year MACRS table, the depreciation rate for the 2nd year is approximately 0.2449.
- Depreciation: [tex]\(3,600 \times 0.2449 = \$881.64\)[/tex]

9. Office Building:
- Purchase Year: 2023
- Age in 2023: 0 years
- Using the 39 year SL method, the annual depreciation rate is approximately [tex]\( \frac{1}{39} \approx 0.0256\)[/tex].
- Depreciation: [tex]\(330,000 \times 0.0 = \$0\)[/tex] (no allowance for 2023)

Summing up all the depreciation amounts:
[tex]\[ 576 + 800 + 126.72 + 161.28 + 661.23 + 1036.8 + 3143.8 + 881.64 + 0 = 7,387 \][/tex]

Therefore, the total current-year depreciation allowance for Casper's business is $7,387.
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