Julia Jimenez began a new business on January 1, 2019, to which she has devoted most of her time and which has provided her livelihood for the last few years. Hav A Java is a drive-up coffee stand in the town where she lives. The location is easily accessible for both drive-ups, as well as walk ups from the nearby high school and middle school. During 2022, she had nine employees plus herself, working as baristas, to cover the business hours from 5am – 7pm, seven days per week.She takes payments with cash, plastic, and digital payments. She does her own payroll and payroll reporting using FastBooks and handles her own bookkeeping records using the same software, and for state sales tax reporting. She provides annual reports and other records to her tax preparer. Julia is single with no dependents. Hav A Java sells espressos and other hot and cold drinks, along with breakfast items, sandwiches, and desserts. Most of the special food items are purchased from local small businesses, but they sell to her at wholesale prices. She works in the shop herself five days per week and she hires high school- and college-aged employees on a part-time basis to cover the shifts needed to operate the business during the open hours and to have needed staff for the busiest times based on history. Because she is in easy walking distance from two large schools, she has regular walk-up busy periods as well as drive-up traffic patterns. Julia timely made four equal quarterly payments of $20,000 for federal tax purposes. Julia has purchased the following assets for the business since she began the coffee shop business. She opted for all assets to use regular MACRS for the useful life as noted in the CLADR tables, rather than any special depreciation, section 179, or expensing any part of the equipment as start-up costs. The building is a custom-built prefab structure that is currently plumbed, powered, and "permanently" placed on rented land—although it could in the future be moved. Julia uses her personal vehicle to pick up certain certain supplies and food products that she purchases from local small businesses to sell at her shop. Julia drives a 2018 Toyota Corolla which she purchased new on February 15, 2017, for $32,000.
She has always used the standard mileage rate and keeps track of her mileage on a log that she keeps in her car. From January 1, 2022, through June 30, 2022, she drove 726 miles, and from July 1, 2022, through December 31, 2022, she drove 760 miles. The other miles for the year that she drove her car were 15,462.
Julia provided her prior year tax return, which showed the attached depreciation schedule.
View assets and complete the depreciation worksheet to continue. Enter numbers ONLY, no characters except for Date Placed in Service (xx/xx/xxxx).
Asset Date Placed in Service Cost Prior Depreciation 12/31/2021
Building 01/01/2019 $25,000 $1,897
Espresso Machine 1 01/01/2019 3,500 2,492
Espresso Machine 2 01/01/2019 3,500 2,492
Freezer 07/01/2021 1,500 300
New Bean Grinder 03/15/2022 2,000
Portable AC Unit (7 07/01/2022 1,200
year)
Complete the depreciation worksheet below. (Only number entries for all but Date Placed in Service)
Description of Property Date Placed in Service Cost Section 179* Prior Depreciation Years Recovery Period Depreciation Deduction
Building
01/01/2019
$25,000
1,897
Espresso Machine 1
01/01/2019
3,500
2,492
Espresso Machine 2
01/01/2019
3,500
2,492
Freezer
07/01/2021
1,500
300
New Grinder
03/15/2022
2,000
AC Unit (7 year)
07/01/2022
1,200
2018 Toyota Corolla
Total 2022 Depreciation Deduction allowed on the Tax Return
