Homework Answers
MACRS depreciation for 2019 i.e. year 1 = Cost / Useful Life X 200% X Depreciation Convention
For mentioned question,
Cost = 20700
Useful Life = 5 years
200% is the double declining method taken for depreciation
Depreciation Convention = Half-year convention, since the car is purchase during May 2019.
Putting the above in formula,
Depreciation = 20700 / 5 X 200% X 1/2 = 4140 X 200% X 1/2 = 8280 X 1/2 = 4140
Now, the car has been used for official and personal purpose, hence, the deductible amount = depreciation on official purpose.
Official run = 7700 miles
Personal Run = 2900 miles
Total Run = 10600 miles
Therefore, proportionating the depreciation calculated above,
Deductible depreciation = Total Depreciation X Official Run / Total Run = 4140 X 7700 / 10600 = 3007.35 = $3,007
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