TAX 4001 Tepper Company Cost Recovery Project Plan Paper TAX 4001:Federal Income Tax I Cost Recovery Project (Depreciation, Amortization, Section 179) Proj

TAX 4001 Tepper Company Cost Recovery Project Plan Paper TAX 4001:Federal Income Tax I Cost Recovery Project (Depreciation, Amortization, Section 179) Project Details and Requirements This project is worth 5% of your grade TAX 4001: Federal Income Tax I
Cost Recovery Project (Depreciation, Amortization, Section 179)
Project Details and Requirements
This project is worth 5% of your grade
THIS PROJECT IS DUE IN THE CANVAS DROPBOX BY 1:59 pm on MONDAY, OCTOBER
30. BECAUSE YOU HAVE TWO MONTHS TO COMPLETE IT, LATE PROJECTS WILL NOT
BE ACCEPTED FOR ANY REASON.
Facts: The Tepper Company, a calendar year taxpayer, began doing business on 1/1/Year 1. Tepper is in
the business of providing data analysis services (it is NOT a manufacturer). During Year 1, Tepper
acquired the following assets and capitalized the following expenses:
Description
Start-up Costs
Office Furniture
Computer Hardware
Calculators
Copy Machines
Land
Building
Paving
Office Fixtures
Date Placed in Service
1/1/Year 1
1/1/Year 1
2/1/Year 1
2/1/Year 1
2/1/Year 1
6/13/Year 1
6/13/Year 1
10/15/Year 1
11/1/Year 1
Initial Basis
$53,000
175,000
110,000
5,000
12,000
300,000
450,000
100,000
80,000
On 4/1/Year 1, Tepper acquired the assets of Fessler, Co (one of Tepper’s competitors) and allocated
basis to the following assets:
Description
Date Placed in Service
Initial Basis
Computer Hardware
4/1/Year 1
490,000
Computer Software (see below)
4/1/Year 1
685,000
Office Communications Equipment
4/1/Year 1
30,000
Office furniture & Fixtures
4/1/Year 1
150,000
Goodwill
4/1/Year 1
90,000
$200,000 of the acquired computer software was off the shelf purchased by the competitor at Best Buy.
The remaining $485,000 of the computer software was specially developed for Fessler’s use by paid
consultants.
For Year 1, Tepper reported taxable income of $5 million prior to considering Code section 179,
depreciation or amortization.
Project Requirements next page.
TAX 4001 Cost Recovery Project
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For Year 1: Assume that Tepper will make whatever decisions/elections that will yield it the most cost
recovery deductions.
REQUIRED: Submit 1 Excel File
Compute Tepper’s Year 1 cost recovery deductions related to the assets listed (showing calculations for
each asset) for assets placed in service during Year 1. Use the PowerPoints I’ve provided that walk you
through the process to help you. Assume that: 1) Bonus depreciation percentage is 50%, and 2) The
maximum 179 deduction is $1 million and the 179 deduction amount phases out between $2.5 and $3.5
million of eligible property.
Excel File Requirements: All projects must be submitted in Excel and, where computations are
required, Excel must be used to make them (i.e., do not use Excel as WORD). There should be separate
tabs as follows:
• Category tab (provided)
• Lead – Summarizes the 179/depreciation/amortization deductions for each asset. The
computations from the tabs after it should come from those tabs.
• 179 Tab: Analyzes 179 and computes the 179 deduction (if applicable)
• Bonus Tab: Analyzes bonus depreciation and computes it
• MACRS Tab: Analyzes the MACRS conventions used and provides MACRS depreciation
computations
• Other: Provides computation for other cost recovery (e.g., amortization and non-MACRS
property)
It is ok to collaborate with classmates on this assignment, but everyone must submit his/her own
project.
The EXCEL ASSIGNMENT is DUE by 11:59 pm on Sunday, 3/24 (but I will accept the assignment
late without any reduction for points – up to 5/1/2019 @ 11:59pm – no permission is necessary. If I
do not receive anything by 5/1 @ 11:59 pm, zero points will be awarded)
TAX 4001 Cost Recovery Project
Page 2 of 2

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