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What is the maximum federal cost recovery deduction

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Reference no: EM133061197

Question - Park Corporation purchased and placed in service the following assets in 2021:

PIS Date

Asset

Cost

2/26/2021

Computers

$750,000

6/12/2021

Office Furniture

$570,000

11/15/2021

Gen. manufacturing equipment

$1,500,000

11/16/2021

Manufacturing building

$6,000,000

Park Corporation purchased no other assets during 2021 and its net income for 2021 is $50,000,000 before considering cost recovery deductions.

Required -

a. What is the maximum federal cost recovery deduction Park Corporation may take in 2021 assuming the company elects §179 expense and elects out of bonus depreciation? Show calculations.

b. What is the federal cost recovery deduction Park Corporation may take in 2022 on the office furniture asset?

c. What is Park Corporation's adjusted basis in the office furniture at the end of 2022?

d. How would your answer to question 2(a) above change if Park Corporation does NOT elect out of bonus depreciation in 2021? That is, what is the maximum federal cost recovery deduction Park Corporation may take in 2021 assuming that Part Corporation takes bonus depreciation on any qualifying assets? Show calculations.

Reference no: EM133061197

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