46. Michael is the sole proprietor of a small business. In June 2018, his business income is $12,000
before consideration of any § 179 deduction. He spends $245,000 on furniture and equipment in 2018.
If Michael elects to take the § 179 deduction and no bonus on a conference table that cost $25,000
(included in the $245,000 total), determine the maximum cost recovery for 2018 with respect to the
conference table:
48. Brittany purchased a building for $500,000 on January 1, 2010. The purchase price does not include
land. Calculate the cost recovery for 2010 and 2018 if the real property is
a. Residential real property:
b. A warehouse:
54. Rebecca is a doctor with an AGI of $125,000 before consideration of income or loss from her dog
breeding business. Her home is on 15 acres, 10 of which she uses to house the animals and provide
them with ample space to play and exercise. Her records show the following related income and
expenses for the current year:
Income from fees and sales
Expenses:
Dog food
Veterinary bills
Supplies
Publications and dues
$2,500
$4,000
3,500
1,200
350
a. How must Rebecca treat the income and expenses of the operation if the dog breeding business
is held to be a hobby?
b. How would your answer differ if the operation were held to be a business?
55. Eric, who is single, has income from his Schedule C of $150,000. His taxable income is $120,000 after
his other deductions. What is Eric’s QBI deduction for 2018?
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