Benson’s Park Restoration and Maintenance Company Case Discussion 

Question Description

Benson owns the Park Restoration and Maintenance Company (PRMC) and estimates his 2020 income will be about $220,000. Benson bought and placed into service a warehouse costing $650,000 ($50,000 to land) on February 10, 2014. On June 14, 2019 Benson placed $420,000 of computers and peripheral equipment (all 100% business use in business offices).

He placed $810,000 of heavy-duty (over 13,000 pounds unloaded), general purposes trucks (all 100% business use) into service on August 20, 2020. On October 13, 2020, Benson placed $1.970,000 of tools and equipment into service.

Benson would like to take the maximum amount of deductions possible under the current laws (Mordecai and Rigby, his buddies (?) told him about the $179 election, only they called it the 197 elections). Calculate PRMC’s total deductions relating to cost recovery for 2020 providing the maximum deduction allowed (assume Benson/PRMC does not elect to use straight-line depreciation and elects NOT to use Bonus’ depreciation).

Use correct cost recovery methods and amounts as described in your tax textbook and/or IRS/other resources for 2020 (what are $179 limits ??), and take advantage of all elections available (except ones noted above). Assume that no special elections ($179 or Bonus) were taken in prior years. and there are no carryovers from prior years.