Joe Purchased a New Five-Year Class Asset on June 1,2016

question 44

Essay

Joe purchased a new five-year class asset on June 1,2016.The asset is listed property (not an automobile).It was used 55% for business and 45% for the production of income.The asset cost $1,000,000.Joe made the § 179 election.Joe's taxable income would not create a limitation for purposes of the § 179 deduction.Joe does not take additional first-year depreciation (if available).Determine Joe's total cost recovery (including the § 179 deduction)for the year.

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Definitions:

Unrealized Profits

are profits that have been earned but not yet realized through a transaction, such as an increase in value of unsold stocks.

After-Tax Dollar Value

The amount of money left after federal, state, and other governmental taxes have been deducted.

Tax Rate

The percentage at which an individual or corporation is taxed on their income or profits.

Adjusted Net Income

Net income adjusted for specific expenses, revenues, gains, or losses to provide a clearer picture of operational performance.