Problem - Back in Boston, Steve has been busy creating and managing his new company, Teton Mountaineering (TM), which is based out of a small town in Wyoming. In the process of doing so, TM has acquired various types of assets. Below is a list of assets acquired during 2011:
|
Asset
|
Cost
|
Date Placed in Service
|
|
Office equipment
|
$10,000
|
02/03/2011
|
|
Machinery
|
560,000
|
07/22/2011
|
|
Used delivery truck*
|
15,000
|
08/17/2011
|
* Not considered a luxury automobile, thus not subject to the luxury automobile limitations.
During 2011, TM had huge success (and had no §179 limitations) and Steve acquired more assets the next year to increase its production capacity. These are the assets that were acquired during 2012:
|
Asset
|
Cost
|
Date Placed in Service
|
|
Computers & info. system
|
$40,000
|
03/31/2012
|
|
Luxury auto†
|
80,000
|
05/26/2012
|
|
Assembly equipment
|
475,000
|
08/15/2012
|
|
Storage building
|
400,000
|
11/13/2012
|
† Used 100 percent for business purposes.
TM generated a taxable income in 2012 before any §179 expense of $732,500.
Required:
1) Compute the maximum 2012 depreciation deduction including Sec. 179 expense and bonus depreciation. Label your work.
2) Required: Find the Code sections for each of the following independent questions. Cut and paste the applicable section in your answers.
a. What Code Section specifies that a Simplified Employee Pension Plan will allow the proprietor to deduct up to 20% of self-employment income?
b. What Code Section disallows deductions for payments made for political purposes?
c. What Code Section allows a ministers to exclude the rental value of their home (parsonage allowance)?
d. What Code Section disallows standard deductions for nonresident aliens?
e. What Code Section excludes gain on the transfer of property other than cash to a former spouse under a divorce decree?