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Lina purchased a new car for use in her business during 2018. The auto was the only business asset she purchased during the year and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2018 and 2019 (Lina doesn’t want to take bonus depreciation for 2018 or 2019) in the following alternative scenarios (assuming half-year convention for all) (Use MACRS Table 1, Table 2, and Exhibit 10-10.):

e. The vehicle cost $75,000, and she used it 20 percent for business.

Answer 1

e. The vehicle cost $75,000, and she used it 20 percent for business.

Description	2018 Amount	2019 Amount	Explanation
(1) Original basis of auto	$75,000	$75,000
(2) MACRS (Straight-line) depreciation rate	10%	20%	5-yr straight-line, ½ yr. convention.
(3) Full MACRS depreciation expense	$7,500	$15,000	(1) * (2)
(4) Maximum auto depreciation	$10,000	$16,000	Luxury auto limits
(5) Depreciation deduction for year based on 100% business use	$7500	$15000	Lesser of (3) or (4)
(6) Business use percentage	20%	20%
Depreciation deduction for year	$1500	$3000	(5) x (6)