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Answer part A and fill in the blanks for part B(Boxes 2, 6b, 14, 22, and the 2 boxes in Row 19c).

Problem 5-42 (LO. 7)

On June 5, 2017, Javier Sanchez purchased and placed in service a 7-year class asset costing $560,000 for use in his landscaping business, which he operates as a single member LLC (Sanchez Landscaping LLC). During 2017, his business generated a net income of $945,780 before any 179 immediate expense election. Determine the maximum deductions (including first year additional depreciation) that Javier Sanchez can claim with respect to this asset in 2017 and 2018. If required round your intermediate computations and final answers to the nearest dollar. Click here to access the depreciation table to use for this problem. The maximum 179 for 2017 is $510,000 and the reduction threshold is $2,030,000.

a. Javier Sanchez's total cost recovery deduction in 2017 is $_____ and $_____ in 2018 .

b. Complete Javier's Form 4562 (page 1) for 2017. If an amount is zero, enter "0". Enter amounts as positive numbers.

m 4562 Department of the Treasury Internal Revenue Service (99) Depreciation and Amortization (Including Information on Listed Property) Attach to your tax return. Information about Form 4562 and its separate instructions is at www.irs.gov/form4562. OMB No. 1545-0172 2017 Attachment Sequence No. 179 Name(s) shown on return Javier Sanchez Business or activity to which this form relates Sanchez Landscaping, LLC Identifying number 123-45-6789 Part I Election To Expense Certain Property Under Section 179 Note: If you have any listed property, complete Part V before you complete Part I. 1 Maximum amount (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 510,000 2 Total cost of section 179 property placed in service (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 _______ 3 Threshold cost of section 179 property before reduction in limitation (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2,030,000 4 Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 0 5 Dollar limitation for tax year. Subtract line 4 from line 1. If zero or less, enter -0-. If married filing separately, see instructions 5 510,000 6 (a) Description of property (b) Cost (business use only) ___________ (c) Elected cost 510,000 Landscaping equipment 7 Listed property. Enter the amount from line 29 . . . . . . . . . . . . . . . . . . . . . . . . . . 7 8 Total elected cost of section 179 property. Add amounts in column (c), lines 6 and 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 510,000 9 Tentative deduction. Enter the smaller of line 5 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 510,000 10 Carryover of disallowed deduction from line 13 of your 2016 Form 4562 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 0 11 Business income limitation. Enter the smaller of business income (not less than zero) or line 5 (see instructions) . . . . . . . 11 510,000 12 Section 179 expense deduction. Add lines 9 and 10, but don't enter more than line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . 12 510,000 13 Carryover of disallowed deduction to 2018. Add lines 9 and 10, less line 12. . . . . . 13 0 Note: Don't use Part II or Part III below for listed property. Instead, use Part V. Part II Special Depreciation Allowance and Other Depreciation (Don't include listed property.) (See instructions.) 14 Special depreciation allowance for qualified property (other than listed property) placed in service during the tax year (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 ________ 15 Property subject to section 168(f)(1) election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 16 Other depreciation (including ACRS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Part III MACRS Depreciation (Don't include listed property.) (See instructions.) Section A 17 MACRS deductions for assets placed in service in tax years beginning before 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 18 If you are electing to group any assets placed in service during the tax year into one or more general asset accounts, check here Section BAssets Placed in Service During 2017 Tax Year Using the General Depreciation System (a) Classification of property (b)Month and year placed in service (c) Basis for depreciation (business/investment use onlysee instructions) (d)Recovery period (e)Convention (f)Method (g)Depreciation deduction 19a 3-year property b 5-year property c 7-year property ___________ 7 yrs. HY DDB _________ d 10-year property e 15-year property f 20-year property g 25-year property 25 yrs. S/L h Residential rental 27.5 yrs. MM S/L property 27.5 yrs. MM S/L i Nonresidential real 39 yrs. MM S/L property MM S/L Section CAssets Placed in Service During 2017 Tax Year Using the Alternative Depreciation System 20a Class life S/L b 12-year 12 yrs. S/L c 40-year 40 yrs. MM S/L Part IV Summary (See instructions.) 21 Listed property. Enter amount from line 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 22 Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on the appropriate lines of your return. Partnerships and S corporationssee instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 ________ 23 For assets shown above and placed in service during the current year, enter the portion of the basis attributable to section 263A costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 12906N Form 4562 (2017)

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