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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 5179 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) e. The vehicle cost $50,000, and she used it 20 percent for business Year Depreciation deduction $ 1,000 2019 2020

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Answers are highlighted in yellow: Solution: Year Depreciation | deduction 2019 $ 1,000 Because asset used less than 50% for business can be depreciated with MACRS straight line method. 2020 $ 2,000 Because asset used less than 50% for business can be depreciated with MACRS straight line method. Working: Assumed no bonus: $ 1 Original cost or basis of auto 2 MACRS depreciation rate for 5 year, HY convention (Straight line) 3 Full MACRS depreciation 4 Maximum auto depreciation as per 2019 rule Lower of 3 or 4 at 100% business use Business use percentage Maximum Depreciation deduction $ $ $ 2019 50,000 $ 10% 5,000 $ 10,000 $ 5,000 $ 20% 1,000$ 2020 50,000 20% 10,000 16,000 10,000 20% 2,000 $