Question

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Lina purchased a new car for use in her business during 2020. 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 2020 and 2021 (Lina doesn’t want to take bonus depreciation for 2020 or 2021) 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 $30,400, and business use is 100 percent (ignore §179 expense).

b. The vehicle cost $72,000, and business use is 100 percent.

c. The vehicle cost $72,000, and she used it 80 percent for business.

d. The vehicle cost $72,000, and she used it 80 percent for business. She sold it on March 1 of year 2.

e. The vehicle cost $72,000, and she used it 20 percent for business.

f. The vehicle cost $72,000, and it is an SUV that weighs 6,500 pounds. Business use was 100 percent.

     

     

     

     

     

Answer 1

a. Depreciation for 2020 - $ 6080 and for 2021 - $9728

b. Depreciation (assuming a normal car) for 2020 - $ 10100 and 2021 - $16100  

c. Depreciation for 2020 - $8080 and for 2021 - $12880