Question

Problem 8-47 (LO. 2, 3, 4) On March 15, 2019, Helen purchased and placed in service a new Escalade. The purchase price of the automobile was $62,000, and the vehicle had a rating of 6,500 GVW. The vehicle was used 100% for business. If required, round your answers to the nearest dollar. Click here to access the depreciation table to use for this problem. a. Assuming that Helen does not use additional first-year depreciation, calculate the total depreciation deduction that she can take on the vehicle for 2019. Section $ 179 expense $ 62,000 X MACRS cost recovery 9,817 52,183 x x Total deduction $ b. What is her total depreciation deduction if Helen decided to take additional first-year depreciation? $ 12,400 x

Answer 1

Answer:

a)

Section 179 expense	$25500
MACRS cost recovery [(62000-25500)x0.20]	$7300
Total Deduction	$32800

Escalade is not treated as passanger automobile, because its GVW rating exceeds 6000 pounds. Thus it is not subject to luxury auto recovery limitations. However the vechile is an SUV with a GVW rating between 6000 to 14000 pounds, the 179 expense

b)
Total depreciation deduction = $62000
Since, Helen effects to use bonus depreciation on the SUV full cost of $62000 would be recovered in 2019.