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.

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