Question

Problem 8-46 (Algorithmic) (LO. 4) On March 30, 2018, Leo purchased and placed in service a new car that cost $64,200. The business use percentage for the car is always 100%. He does not take the additional first-year depreciation or any 179. If required, round your answers to the nearest dollar. Click here to access the depreciation table of the textbook. Click here to access the limits for certain automobiles. a. What MACRS Convention applies to the new car? Half-year b. Is the automobile considered "listed property"? Yes ✓ c. Leo's cost recovery deduction in 2018 is $ 11,160 X and for 2019 is $ 3,200 x Check My Work Assets used in a trade or business or for the production of income are eligible for cost recovery if they are subject to wear and tear, decay or decline from natural causes, or obsolescence.

Answer 1

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Solution: Answers are highlighted in yellow: As per Tax year 2018 rules, answer may be different for different year: Half-year Because, asset was not placed in last quarter of year. b) Yes It is standardized. No Bonus or section 179 depreciation elected. Therefore, Leo's cost recovery deduction in 2018 = Lower of $10,000 or (64200*20%) $ 10,000 Leo's cost recovery deduction in 2019 = Lower of (64200*32%) or $16000 $ 16,000