Determine the cost recovery deductions

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On June 5, 2018, Javier Sanchez purchased and placed in service a new 7-year class asset costing $560,000 for use in his landscaping business, which he operates as a single member LLC (Sanchez Landscaping LLC). During 2018, his business generated a net income of $945,780 before any § 179 immediate expense election. Rather than using bonus depreciation, Javier would like to use § 179 to expense $200,000 of this asset and then use regular MACRS to cost recover the remaining cost.

If required round your intermediate computations and final answers to the nearest dollar. Click here to access the depreciation table to use for this problem.

Question a. Determine the cost recovery deductions (including first year additional depreciation) that Javier Sanchez can claim with respect to this asset in 2018 and 2019.

  1. Total cost recovery deduction in 2018: $
  2. Total cost recovery deduction in 2019: $

Reference no: EM132462117

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