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Business, 04.07.2020 22:01 amiechap12

Bob and Michael started a technology support company called eSys Answers. During year 1, they bought the following assets (placed in service on date of purchase) and incurred the following start-up fees:Year 1 Assets Purchase Data BasisComputers (5-year) October 30, Y1 $ 15,000Office equipment (7-year)October 30, Y1 10,000Furniture (7-year) October 30, Y1 3,000Start-up costs October 30, Y1 17,000In year 1, they elected to expense the start-up costs to the maximum extent possible. Note: immediate expensing reduces basis. On April 30, year 2, they purchased a customer list (a Section 197 intangible) for $10,000 from a company providing virtually the same services. During the summer of year 2, they purchased a small van (for transportation, not considered a luxury auto) and a business-use machine (7-year life). They bought the van and placed it in service on June 15, Y2, for $18,000. The machine cost $4,000 and was placed in service on July 1, Y2.Year 2 Assets Purchase DateBasisVan June 15, Y2 $ 18,000Machine (7-year) July 1, Y2 4,000Customer list April 30, Y2 10,000Assume that eSys Answers does not claim any §179 expense or bonus depreciation. (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)Required:a. What are the maximum cost recovery deductions for eSys Answers for Y1 (including immediate expensing) and Y2? Note: start with completing the table for Part C. Year 1 maximum cost recovery will be the Immediate Expense column total (C10) plus the Year 1 Cost Recovery column total (D10). Year 2 maximum cost recovery will be the Year 2 Cost Recovery column total (E10).c. What is eSys Answers’s basis in each of its assets at the end of Y2?

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