Let's break down the solution step-by-step: --- ## **Step 1: List the Assets and Their Costs** | Asset | Placed in Service | Basis | |------------------------------- |------------------|------------| | Office furniture | September 12 | $796,000 | | Computer equipment | February10 | $946,000 | | Delivery truck | August 21 | $84,000 | | Qualified real property (15 yr)| September 30 | $1,515,000 | | **Total** | | $3,341,000 | --- ## **Step 2: Section 179 Deduction (2023 Limits)** - **Maximum §179 limit (2023)**: $1,160,000 - **Phase-out threshold (2023)**: $2,890,000 Since total purchases ($3,341,000) exceed the phase-out threshold, **phase-out applies**: - Excess: $3,341,000 − $2,890,000 = $451,000 - Allowed §179 deduction = $1,160,000 − $451,000 = **$709,000** *Note:* §179 can be applied to all assets except real property. --- ## **Step 3: Allocate §179 Deduction** Apply §179 to the most expensive eligible asset first (Computer equipment), then remainder to next: - **Computer equipment**: $946,000 (apply $709,000 here) - Remaining basis for Computer equipment: $946,000 − $709,000 = $237,000 --- ## **Step 4: Bonus Depreciation (2023 = 80%)** Bonus depreciation applies to the remaining basis of all eligible personal property (not real property): - **Office furniture**: $796,000 × 80% = $636,800 - **Computer equipment (remaining basis)**: $237,000 × 80% = $189,600 - **Delivery truck**: $84,000 × 80% = $67,200 --- ## **Step 5: MACRS Depreciation (on Remaining Basis)** Calculate MACRS on remaining basis **after** §179 and bonus. ### **Office Furniture (7-year, Half-Year Convention)** - Basis after bonus: $796,000 − $636,800 = $159,200 - 1st-year MACRS rate (7-yr, half-year): 14.29% - Depreciation: $159,200 × 14.29% = **$22,757** ### **Computer Equipment (5-year, Half-Year Convention)** - Basis after bonus: $237,000 − $189,600 = $47,400 - 1st-year MACRS rate (5-yr, half-year): 20% - Depreciation: $47,400 × 20% = **$9,480** ### **Delivery Truck (5-year, Half-Year Convention)** - Basis after bonus: $84,000 − $67,200 = $16,800 - 1st-year MACRS rate: 20% - Depreciation: $16,800 × 20% = **$3,360** ### **Qualified Real Property (15-year, Mid-Month Convention, 150% DB)** - No §179 or bonus allowed. - 1st-year MACRS rate (Table 5): 1.667% - Depreciation: $1,515,000 × 1.667% = **$25,268** --- ## **Step 6: Add Up All Depreciation Amounts** - §179: **$709,000** - Bonus: $636,800 (furniture) + $189,600 (computer) + $67,200 (truck) = **$893,600** - MACRS: $22,757 (furniture) + $9,480 (computer) + $3,360 (truck) + $25,268 (real estate) = **$60,865** **Total maximum depreciation deduction:** \[ 709,000 + 893,600 + 60,865 = \boxed{1,663,465} \] --- ## **Final Answer** **Maximum total depreciation deduction:** \[ \boxed{1,663,465} \] --- ### **Summary Table** | Item | Amount | |-------------------|-------------| | §179 Deduction | $709,000 | | Bonus Depreciation| $893,600 | | MACRS Depreciation| $60,865 | | **Total** | **$1,663,465** | --- **All numbers rounded to the nearest dollar as required.**