Bonus Depreciation and Extra Deduction

Please see attached for instructions to this paper -- below is additional information from the professor, please use both in the completion of this work.
PLEASE NOTE: This assignment is for Milestone 1 only.
Here is some updated information that may help you with Milestone One on Depreciation.
First, the Section 179 deduction for 2022 is $1,080,000 and the bonus depreciation rate is 100%.
Also take a look at https://www(dot)irs(dot)gov/newsroom/new-rules-and-limitations-for-depreciation-and-expensing-under-the-tax-cuts-and-jobs-act which provides information on Section 179 and bonus depreciation under the TCJA of 2017.
And, finally this website https://www(dot)section179(dot)org is a helpful resource on the 179 deduction.
As you think about section 179 and accelerated depreciation methods for milestone one, consider why a taxpayer might prefer to use 179 to immediately deduct the cost of an asset rather than depreciate the asset over its MACRS life? I mean the total deduction (and tax savings assuming tax rates are constant) is the same under both methods. I think of this as more of a finance issue than a income tax issue.

Overview: This milestone will help you complete Section I of the final project by creating the first memorandum for the bonus depreciation and extra deduction scenario. Prompt: You are a tax advisor and your client, Nora, owns and operates C-C Bakery. She encounters three different tax scenarios on which she requests your advice. You are to research the relevant tax code and make recommendations to her in the form of a memorandum for each situation. Nora owns a bakery that has been in business for three years. She has reached out to you, her CPA, for advice as she is planning on expanding her business and buying some equipment for her store. She has heard quite a bit from her fellow business owners about bonus depreciation and the ability to take an extra deduction in year one. She needs some advice on whether the assets qualify. She is planning on buying a new oven priced at $10,000, a new bakery display case priced at $5,000, a new connected refrigerator and freezer priced at $7,000, and a used commercial mixer priced at $5,000, and she plans to add some leasehold improvements to the building (work on air condition duct and roofing) priced at $20,000. Her business has been profitable for the last couple of years, averaging $500,000 a year. In a short memorandum, advise how she can apply depreciation, bonus depreciation, and any other special depreciation available for these assets she placed into service on January 1 of this year. Be specific regarding code sections or any other primary or secondary sources. Keep in mind that tax law changes may have occurred with the 2017 Tax Cuts and Jobs Act that affect bonus depreciation as well as the rules regarding other assets. In the course text, you can see Exhibit 10-3 for a sample client letter, as well as Exhibit 10-2 for a sample research memo. Specifically, the following critical elements must be addressed: I. Bonus Depreciation and Extra Deduction A. Identify sources for evaluating appropriate tax situation B. Document research performed to determine if bonus depreciation applies to tax year and specific assets C. Apply research to specific assets and determine amount of deduction D. Document findings and advice in a memo to the client, including supporting details Rubric Guidelines for Submission: Your paper should be submitted as a 2- to 3-page Microsoft Word document with double spacing, 12-point Times New Roman font, and one-inch margins. Cite appropriate academic references as necessary.