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11 Mar
2020

TAX 4001: Federal Income Tax I AssignmentTutorOnline | Good Grade Guarantee!

TAX 4001: Federal Income Tax I
AssignmentTutorOnline
Cost Recovery Project (Depreciation, Amortization, Section 179)
Project Details and Requirements
This project is worth 5% of your grade
THIS PROJECT IS DUE IN THE CANVAS DROPBOX BY 11:59 pm on March 31. Use $1million as the max. 179 deduction with phaseout between $2.5 and $3.5 million. Use 50% for bonus depreciation.
Facts: The Tepper Company, a calendar year taxpayer, began doing business on 1/1/Year 1. Tepper is in the business of providing data analysis services (it is NOT a manufacturer). During Year 1, Tepper acquired the following assets and capitalized the following expenses:
Description Date Placed in Service Initial Basis
Start-up Costs
1/1/Year 1
$53,000
Office Furniture
1/1/Year 1
175,000
Computer Hardware
2/1/Year 1
110,000
Calculators
2/1/Year 1
5,000
Copy Machines
2/1/Year 1
12,000
Land
6/13/Year 1
300,000
Building
6/13/Year 1
450,000
Paving
10/15/Year 1
100,000
Office Fixtures
11/1/Year 1
80,000
On 4/1/Year 1, Tepper acquired the assets of Fessler, Co (one of Tepper’s competitors) and allocated basis to the following assets:
Description Date Placed in Service Initial Basis
Computer Hardware
4/1/Year 1
490,000
Computer Software (see below)
4/1/Year 1
685,000
Office Communications Equipment
4/1/Year 1
30,000
Office furniture & Fixtures
4/1/Year 1
150,000
Goodwill
4/1/Year 1
90,000
$200,000 of the acquired computer software was off the shelf purchased by the competitor at Best Buy. The remaining $485,000 of the computer software was specially developed for Fessler’s use by paid consultants.
For Year 1, Tepper reported taxable income of $3 million prior to considering Code section 179, depreciation or amortization.
For Year 1: Assume that Tepper will make whatever decisions/elections that will yield it the most cost recovery deductions.
Project requirements next page.
REQUIRED: Submit 1 Excel File
Compute Tepper’s Year 1 cost recovery deductions related to the assets listed (showing calculations for each asset) for assets placed in service during Year 1. Use the PowerPoints I’ve provided that walk you through the process to help you. Assume that: 1) Bonus depreciation percentage is 50%, and 2) The maximum 179 deduction is $1 million and the 179 deduction amount phases out between $2.5 and $3.5 million of eligible property.
Excel File Requirements: All projects must be submitted in Excel and, where computations are required, Excel must be used to make them (i.e., do not use Excel as WORD). There should be separate tabs as follows:
Category tab (shows the assets and indicates what category they are in – e.g., 179, Bonus, MACRS (3, 5, 7, 10, 15, 20, 27.5, 39), 195 (startup), 248 (org. expenditures), 197 (off the shelf software amortization), 167 (amortization) or other – note that an asset can be in more than one category.
Lead – Summarizes the 179/depreciation/amortization deductions for each asset. The computations from the tabs after it should come from those tabs.
179 Tab: Analyzes 179 and computes the 179 deduction (if applicable)
Bonus Tab: Analyzes bonus depreciation and computes it
MACRS Tab: Analyzes the MACRS conventions used and provides MACRS depreciation computations
Other: Provides computation for other cost recovery (e.g., amortization and non-MACRS property)
It is ok to collaborate with classmates on this assignment, but everyone must submit his/her own project.
The EXCEL ASSIGNMENT is DUE by 11:59 pm on 3/31

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