Question

4. Your company was formed to develop virus killing soap during the pandemic. You bought land for $300,000, had a $1,000,000 factory building erected, and installed $500,500 worth of soap research formulation and experimental equipment. The facility was finished on March 1, and the government paid you $500,000 for the virus killing soap. Supplies and operating expenses excluding the capital expenditures were $100,000.
Using MACRS GDS depreciation: What is the first-year taxable income?

Answer 1

Answer:

The answer is given below;

Explanation:

Amount Received from Government  $500,000

Less: supplies and operating expenses ($100,000)

Taxable Income                                       $400,000

As the life of building is not given nor its convention rate is given,therefore building depreciation under MACRS GDS is ignored.