Question

George is a self-employed electrician. In April of the current year, George acquired a used van...

George is a self-employed electrician. In April of the current year, George acquired a used van (5-year property) for $15,000. He used the van 75% for business and 25% for personal purposes. George does not apply Sec. 179 or bonus depreciation. The maximum depreciation deduction for the van is

A) $1,200.

B) $2,250.

C) $3,000.

D) $1,920.

Business   Accounting   
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Homework Answers

Answer #1

Answer is B. $ 2250

Explanation:

Cost of the assets (A) $ 15000
used for business purpose (%) (B) 75%
used for business purpose (A*B) 11250
Following MACRS rate of DDB is 20%
Depreciation deduction $ 11250* 20%

2250

Since section 179 is not used by the company than , next applicable method is use of MARCS, hence that is followed. Further, maximum deduction will be under 200 % DD so this method is applied.

Deduction is available only for assets used for business purpose. So it is allowable on 75% of the amount only.

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