1. 2.7.B discusses his little business. I assume the problem intends to have the business show no profit or loss because of Sec 183, hobby loss rules. Depreciation is mentioned but it has been ignored for these calculations for lack of sufficient information.

2. 2.7.C supplies information about the vacation home. Any possible depreciation has been ignored for lack of information.

3. The maximum amount of Section 179 depreciation has been taken in all cases, according to the problem narrative.

4. I calculated the current year depreciation using Sec 179 and MidMonth 39 yrs for the new building (Xcel attached). For the Form 4562, the amount of $57000 of Sec 179 will show on lines 2, 5, and 9. For line 10, I have not calculated the bottom line for the Sch C to be certain that all of the Section 179 depreciation will be allowed. Be sure to check that. The building depreciation of $770 reports on line 19i.

5. A little reminder note for you: be sure to take the reduced mileage rate (not including depreciation) for the 12000 miles of business use of the van in 2005.

6. For the Form 4797, hopefully adobe saved it properly. Let me know if not.

7. I read through the entire problem, and it's a good one - good luck! Let me know if I can help you any further. FYI, in a national survey of a group of tax practitioners preparing the same return, there were normally as many different answers as participants in the survey.

Please see the attached files.