Federal Individual Taxation Samples for Students †MyAssignmenthelp.co

Question: Discuss about the Federal Individual Taxation. Answer: To complete this task of filing Form 1040 Schedule E on behalf of my clients Brian and Sheila Williams, I have used the following definitions and followed the system prescribed under them. Since Brian and Sheila Williams are not in the business of renting personal property, they are not required to file Form-1040 Schedule C or C-EZ. Depreciation Depreciation is an annual deduction which my clients can use for recovering the costs, over a certain number of years, related to their investment properties. Depreciation started when my clients first used the properties for producing income. It shall end when they either take these properties out of service, or have recovered all their depreciable costs, or stop using these properties for producing income. As per the law, a taxpayer can depreciate Tangible Property owned by them and include building, vehicle, machinery, furniture and equipment. An exception is that the taxpayer cannot depreciate land. Modified Accelerated Cost Recovery System Under the current tax code, the Modified Accelerated Cost Recovery System (MACRS) is used for determining an assets depreciation. All assets are classified into classes under MACRS and these define the number of years during which the asset's cost can be recovered. A predetermined schedule determines the percentage of each asset's costs under each MACRS class which can be depreciated each year. My clients own Residential Real Estate properties and these can be depreciated using the Straight Line Method with Useful Life Expectancy of 27.5 years. Fixtures and Equipment are allowed Useful Life Expectancy of 7 Years. Section 179 Property Since my clients are not in the trade of renting properties for trade or business, the properties acquired by them are not covered under Section 179. Section 179 property does not include any property held for investment (section 212 property).