Question

Essentials of Federal Income Taxation (13. Luxury Automobiles. (Obj. 3) Charlotte purchased a new car on March 1, 2013, for $40,000 and uses it 80% of the time for business purposes. Prepare a schedule that shows the maximum depreciation she will be entitled to take in each of the years 2013 through 2019, assuming that she uses the automobile 80% of the time for business each year, and the half year convention applies to all 2013 purchases of personal property. 14. Luxury Automobiles. (Obj. 3) On September 13, 2019, Debi places in service a new car costing $25,000 (her only acquisition during the year). She uses the car 90% of the time for business. Compute Debis maximum bonus deduction for 2019.

Answer 1

Question 13

               

Rate{r}	15%
Year	Opening WDV	Depreciation	Closing WDV
{a}	{b}	{c} =b*r	{d}=b-c
2013	32,000	2,400	29,600
2014	29,600	4,440	25,160
2015	25,160	3,774	21,386
2016	21,386	3,208	18,178
2017	18,178	2,727	15,451
2018	15,451	2,318	13,134
2019	13,134	1,970	11,164
	Total Depreciation	20,836

               

                Notes:

1. If assets are used partly for business and partly for personal use only that portion used for business purpose can be used for claiming depreciation (cost of business use). So here 32000(40000*80%) is the eligible amount for claiming depreciation.

2. Rate assumed on all the above calculation is 15%

3. In the year 2013 only 50% depreciation is only allowed due to half year convention

Question 13

Rate{r}	15%
Year	Opening WDV	Depreciation	Closing WDV
{a}	{b}	{c} =b*r	{d}=b-c
2019	22,500	1,688	20,813

Notes:

1. If assets are used partly for business and partly for personal use only that portion used for business purpose can be used for claiming depreciation (cost of business use). So here 22500(25000*90%) is the eligible amount for claiming depreciation.

2. Rate assumed on all the above calculation is 15%

3. In the year 2019 only 50% depreciation is only allowed due to half year convention