Because Fields of Flowers is a corporation, it reports depreciation
on Form 4562. The corporation enters the total depreciation deduction
($10,770.50) for the property placed in service before 2000 on line 17
in Part III.
The delivery truck has seating only for the driver. It is not
listed property. If it were listed property, its depreciation would
have been reported on page 2 of Form 4562.
The corporation reports the depreciation for the computer on line
15(b) in Part II. It uses GDS for this property and applies a
mid-quarter convention. It enters "MQ" in column (e) to show the
mid-quarter convention is applied and "200DB" in column (f) to
show they are using the 200% declining balance method. It enters the
depreciation deduction of $750 in column (g).
The corporation reports the depreciation for the file cabinets and
the store counters on line 16(a). They have an ADS recovery period and
class life assigned to them in the Table of Class Lives and
Recovery Periods in Appendix B. Because they have two different
class lives and neither is 12 years or 40 years, the corporation lists
them on a separate schedule (not shown here). It enters the
depreciation deduction of $43.80 in column (g).
The van is listed property. The corporation reports the
depreciation for it on page 2 of Form 4562. Fields of Flowers has
taxable income of $45,389. It elects to take a section 179 deduction
of $20,000 on the van. The van weighs over 6,000 pounds. It is not a
passenger automobile for the limits discussed under Special Rule
for Passenger Automobiles, earlier.
The corporation reduces the cost of the van by the amount of the
section 179 deduction. It enters "5" in column (f) to show the
recovery period in years and "200DB" and "MQ" in column (g)
to show they are using the 200% declining balance method and that they
are applying the mid-quarter convention. It enters the depreciation
deduction of $240 in column (h) and the section 179 deduction of
$20,000 in column (i).
The corporation enters the amount from line 26 on line 20 and the
amount from line 27 on line 7. It completes Part I to determine its
allowable section 179 deduction. It adds the amounts on lines 12,
15(b), 16(a), 17, and 20 and enters the total, $31,804.30, on line 21.
It rounds the total to $31,804 and enters it on the depreciation line
of its tax return.
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