On October 15, 2019, Jon purchased and placed in service a used car. The purchase price was $38,000. This was the only business use asset Jon acquired in 2019. He used the car 80% of the time for business and 20% for personal use. Jon used the regular MACRS method. Calculate the total cost recovery deduction Jon may take for 2019 with respect to the car.

Question

Mathematics

Larry

20 December, 14:46

On October 15, 2019, Jon purchased and placed in service a used car. The purchase price was $38,000. This was the only business use asset Jon acquired in 2019. He used the car 80% of the time for business and 20% for personal use. Jon used the regular MACRS method. Calculate the total cost recovery deduction Jon may take for 2019 with respect to the car.

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Answers (1)

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Melody Klein · Answer 1

cost recovery deduction = $1520

Step-by-step explanation:

given data

purchase price = $38,000

used the car business = 80%

used the car personal = 20%

solution

cost recovery limit are

cost recovery limit = asset value * statutory % * mid quater convention ... 1

we know car which have 5 year MACRS convention and as per MACRS depreciated 20 % in 1st year

and here this car is use so no 1st year depreciation

so we use MACRS statutory % method

cost recovery limit = $38000 * 5%

cost recovery limit = $1900

we know maximum limit is $3160

so cost of recovery is $1900

so

cost recovery deduction is

cost recovery deduction = cost recovery limit - personal use

cost recovery deduction = $1900 - ($1900 * 20%)

cost recovery deduction = $1520