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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 $31,200 and business use is 100 percent (ignore §179 expense).

b. The vehicle cost $76,000, and business use is 100 percent.

c. The vehicle cost $76,000, and she used it 80 percent for business.

d. The vehicle cost $76,000, and she used it 80 percent for business. She sold it on March 1 of year 2.

e. The vehicle cost $76,000, and she used it 20 percent for business.

f. The vehicle cost $76,000, and is an SUV that weighs 6,500 pounds. Business use was 100 percent.

EXHIBIT 10-10 Automobile Depreciation Limits

	Year Placed in Service
	2019*	2018	2017	2016
Recovery Year 1	10,000**	10,000*	3,160*	3,160*
Recovery Year 2	16,000	16,000	5,100	5,100
Recovery Year 3	9,600	9,600	3,050	3,050
Recovery Year 4 and after	5,760	5,760	1,875	1,875

TABLE 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

Answer 1

Dear Student,

As per the HomeworkLib policy, only first four parts of the question should be ansered. Kindly take note of it.

Part A

Description	2019	2020	Explanation
(1) Original basis of auto	31200	31200
(2) MACRS depreciation rate	20%	32%	5-yr prop, yr. 1, ½ yr. convention
(3) Full MACRS depreciation expense	6240	9984	(1) x (2)
(4) Maximum auto depreciation	10000	16000	Luxury auto limits
Depreciation deduction for year	$6240	$9984	Lesser of (3) or (4))

Part B

Description	2019	2020	Explanation
(1) Original basis of auto	76000	76000
(2) MACRS depreciation rate	20%	32%	5-yr prop, yr. 1, ½ yr. convention
(3) Full MACRS depreciation expense	15200	24320	(1) x (2)
(4) Maximum auto depreciation	10000	16000	Luxury auto limits
Depreciation deduction for year	$10000	$16000	Lesser of (3) or (4))

Part C

Description	2018	2019	Explanation
(1) Original basis of auto	76000	76000
(2) MACRS depreciation rate	20%	32%	5-yr prop, yr. 1, ½ yr. convention
(3) Full MACRS depreciation expense	15200	24320	(1) x (2)
(4) Maximum auto depreciation	10000	16000	Luxury auto limits
(5)Depreciation deduction for year based on 100% business use	$10000	$16000	Lesser of (3) or (4))
(6) Business use percentage	80%	80%
Depreciation deduction for year	8000	12800	(5) x (6)

Part D

Description	2018	2020	Explanation
(1) Original basis of auto	76000	76000
(2) MACRS depreciation rate	20%	32%	5-yr prop, yr. 1, ½ yr. convention
(3) Full MACRS depreciation expense	15200	24320	(1) x (2)
(4) Maximum auto depreciation	10000	16000	Luxury auto limits
(5)Depreciation deduction for year based on 100% business use	$10000	$16000	Lesser of (3) or (4))
(6) Partial year	100%	50%	Half year of depreciation (half-year convention)
(7) Depreciation deduction for year	$10000	8000
(8) Business use percentage	80%	80%
Depreciation deduction for year	8000	6400	(7) x (8)