Lina purchased a new car for use in her business during 2019. The auto was the only business asset she purchased during the year and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2019 and 2020 (Lina doesn’t want to take bonus depreciation for 2019 or 2020) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1, Table 2, and Exhibit 10-10.)
a) The vehicle cost $33,000and business use is 100 percent (ignore §179 expense).
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b) The vehicle cost $85,000, and business use is 100 percent.
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c) The vehicle cost $85,000, and she used it 80 percent for business.
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d) The vehicle cost $85,000, and she used it 80 percent for business. She sold it on March 1 of year 2.
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e) The vehicle cost $85,000, and she used it 20 percent for business.
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f) The vehicle cost $85,000, and is an SUV that weighed 6,500 pounds. Business use was 100 percent.
2017
2018
ABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter
Depreciation Rate for Recovery Period | ||
---|---|---|
5-Year | 7-Year | |
Year 1 | 35.00% | 25.00% |
Year 2 | 26.00 | 21.43 |
Year 3 | 15.60 | 15.31 |
Year 4 | 11.01 | 10.93 |
Year 5 | 11.01 | 8.75 |
Year 6 | 1.38 | 8.74 |
Year 7 | 8.75 | |
Year 8 | 1.09 |
TABLE 2b MACRS Mid-Quarter Convention: For property placed in service during the second quarter
Depreciation Rate for Recovery Period | ||
---|---|---|
5-Year | 7-Year | |
Year 1 | 25.00% | 17.85% |
Year 2 | 30.00 | 23.47 |
Year 3 | 18.00 | 16.76 |
Year 4 | 11.37 | 11.97 |
Year 5 | 11.37 | 8.87 |
Year 6 | 4.26 | 8.87 |
Year 7 | 8.87 | |
Year 8 | 3.34 |
TABLE 2c MACRS Mid-Quarter Convention: For property placed in service during the third quarter
Depreciation Rate for Recovery Period | ||
---|---|---|
5-Year | 7-Year | |
Year 1 | 15.00% | 10.71% |
Year 2 | 34.00 | 25.51 |
Year 3 | 20.40 | 18.22 |
Year 4 | 12.24 | 13.02 |
Year 5 | 11.30 | 9.30 |
Year 6 | 7.06 | 8.85 |
Year 7 | 8.86 | |
Year 8 | 5.53 |
TABLE 2d MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter
Depreciation Rate for Recovery Period | ||
---|---|---|
5-Year | 7-Year | |
Year 1 | 5.00% | 3.57% |
Year 2 | 38.00 | 27.55 |
Year 3 | 22.80 | 19.68 |
Year 4 | 13.68 | 14.06 |
Year 5 | 10.94 | 10.04 |
Year 6 | 9.58 | 8.73 |
Year 7 | 8.73 | |
Year 8 | 7.64 |
Table 1 MACRS Half-Year Convention
Depreciation Rate for Recovery Period | ||||||
---|---|---|---|---|---|---|
3-Year | 5-Year | 7-Year | 10-Year | 15-Year | 20-Year | |
Year 1 | 33.33% | 20.00% | 14.29% | 10.00% | 5.00% | 3.750% |
Year 2 | 44.45 | 32.00 | 24.49 | 18.00 | 9.50 | 7.219 |
Year 3 | 14.81 | 19.20 | 17.49 | 14.40 | 8.55 | 6.677 |
Year 4 | 7.41 | 11.52 | 12.49 | 11.52 | 7.70 | 6.177 |
Year 5 | 11.52 | 8.93 | 9.22 | 6.93 | 5.713 | |
Year 6 | 5.76 | 8.92 | 7.37 | 6.23 | 5.285 | |
Year 7 | 8.93 | 6.55 | 5.90 | 4.888 | ||
Year 8 | 4.46 | 6.55 | 5.90 | 4.522 | ||
Year 9 | 6.56 | 5.91 | 4.462 | |||
Year 10 | 6.55 | 5.90 | 4.461 | |||
Year 11 | 3.28 | 5.91 | 4.462 | |||
Year 12 | 5.90 | 4.461 | ||||
Year 13 | 5.91 | 4.462 | ||||
Year 14 | 5.90 | 4.461 | ||||
Year 15 | 5.91 | 4.462 | ||||
Year 16 | 2.95 | 4.461 | ||||
Year 17 | 4.462 | |||||
Year 18 | 4.461 | |||||
Year 19 | 4.462 | |||||
Year 20 | 4.461 | |||||
Year 21 |
2.231 |
Part A
Description |
2019 |
2020 |
Explanation |
(1) Original basis of auto |
33000 |
33000 |
|
(2) MACRS depreciation rate |
20% |
32% |
5-yr prop, yr. 1, ½ yr. convention |
(3) Full MACRS depreciation expense |
6600 |
10560 |
(1) x (2) |
(4) Maximum auto depreciation |
18100 |
16100 |
Luxury auto limits |
Depreciation deduction for year |
$6600 |
10560 |
Lesser of (3) or (4)) |
Part B
Description |
2019 |
2020 |
Explanation |
(1) Original basis of auto |
85000 |
85000 |
|
(2) MACRS depreciation rate |
20% |
32% |
5-yr prop, yr. 1, ½ yr. convention |
(3) Full MACRS depreciation expense |
17000 |
27200 |
(1) x (2) |
(4) Maximum auto depreciation |
10100 |
16100 |
Luxury auto limits |
Depreciation deduction for year |
$10100 |
$16100 |
Lesser of (3) or (4)) |
Part C
Description |
2018 |
2019 |
Explanation |
(1) Original basis of auto |
85000 |
85000 |
|
(2) MACRS depreciation rate |
20% |
32% |
5-yr prop, yr. 1, ½ yr. convention |
(3) Full MACRS depreciation expense |
17000 |
27200 |
(1) x (2) |
(4) Maximum auto depreciation |
10100 |
16100 |
Luxury auto limits |
(5)Depreciation deduction for year based on 100% business use |
$10100 |
$16100 |
Lesser of (3) or (4)) |
(6) Business use percentage |
80% |
80% |
|
Depreciation deduction for year |
8080 |
12880 |
(5) x (6) |
Part D
Description |
2018 |
2020 |
Explanation |
(1) Original basis of auto |
85000 |
85000 |
|
(2) MACRS depreciation rate |
20% |
32% |
5-yr prop, yr. 1, ½ yr. convention |
(3) Full MACRS depreciation expense |
17000 |
27200 |
(1) x (2) |
(4) Maximum auto depreciation |
10100 |
16100 |
Luxury auto limits |
(5)Depreciation deduction for year based on 100% business use |
$10100 |
16100 |
Lesser of (3) or (4)) |
(6) Partial year |
100% |
50% |
Half year of depreciation (half-year convention) |
(7) Depreciation deduction for year |
$10100 |
8050 |
|
(8) Business use percentage |
80% |
80% |
|
Depreciation deduction for year |
8080 |
6440 |
(7) x (8) |
Part E
Description |
2019 |
2020 |
Explanation |
(1) Original basis of auto |
85000 |
85000 |
Assumed in problem |
(2) MACRS (Straight-line) depreciation rate |
10% |
20% |
5-yr prop, yr. 1, ½ yr. convention |
(3) Full MACRS depreciation expense |
8500 |
17000 |
(1) x (2) |
(4) Maximum auto depreciation |
10100 |
16100 |
|
(5)Depreciation deduction for year based on 100% business use |
8500 |
16100 |
Lesser of (3) or (4) |
(6) Business use percentage |
20% |
20% |
|
Depreciation deduction for year |
$1700 |
$3220 |
(5) X (6) |
Part F
Description |
2019 |
2020 |
Explanation |
(1) Original basis of auto |
85000 |
N/A |
Assumed in problem |
(2) Section 179 expense |
25000 |
N/A |
|
(3) depreciable basis |
60000 |
60000 |
(1) - (2) |
(4) MACRS depreciation rate |
20% |
32% |
5-yr prop, yr. 1, ½ yr. convention |
(5) Full MACRS depreciation expense |
12000 |
19200 |
(3) x (4) |
Depreciation deduction in including section 179 expense for year |
37000 |
19200 |
(2) + (5) |
Lina purchased a new car for use in her business during 2019. The auto was the...
Lina purchased a new car for use in her business during 2019. The auto was the only business asset she purchased during the year and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2019 and 2020 (Lina doesn’t want to take bonus depreciation for 2019 or 2020) in the following alternative scenarios (assuming half-year convention for all) a. The vehicle cost $$31,600 and business use is 100 percent...
Lina purchased a new car for use in her business during 2019. The auto was the only business asset she purchased during the year and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2019 and 2020 (Lina doesn’t want to take bonus depreciation for 2019 or 2020) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1, Table 2, and Exhibit 10-10.) Table 1...
Required information [The following information applies to the questions displayed below.] Lina purchased a new car for use in her business during 2019. The auto was the only business asset she purchased during the year and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2019 and 2020 (Lina doesn’t want to take bonus depreciation for 2019 or 2020) in the following alternative scenarios (assuming half-year convention for all):...
Required information [The following information applies to the questions displayed below.] Lina purchased a new car for use in her business during 2019. The auto was the only business asset she purchased during the year and her business was extremely profitable. Calculate her maximum depreciation deductions (including $179 expense unless stated otherwise) for the automobile in 2019 and 2020 (Lina doesn't want to take bonus depreciation for 2019 or 2020) in the following alternative scenarios (assuming half-year convention for all):...
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