Lori, who is single purchased 3-year class property for $100,000, 5-year property for $200,000 and 7-year class property for $400,000 on May 1, 2021. She doesn’t want to claim any cost recovery deductions using additional first year depreciation or Section 179. Lori’s net income from her business for 2021 is $250,000.
1 Compute Lori’s MACRS cost recovery deduction for 2021.
2.Now assume that Lori wants to elect additional first year depreciation in addition to the MACRS cost recovery deduction computed in Part 1 above. Re-compute Lori’s cost recovery deduction for 2021, starting with the amount you calculated in Part 1 above.
3.Now assume that Lori would like to take advantage of IRC Section 179 without considering additional 1st year depreciation. Calculate Lori’s cost recovery deduction using Section 179 and the amount of any Section 179 carryforward.