Question

45- a) Arlington LLC purchased an automobile for $55,000 on July 5, 2020. What is Arlington's depreciation deduction for 2020 if its business-use percentage is 75 percent? (Ignore any possible bonus depreciation.) (Use Exhibit 10-10.)

• $4,250

• $5,500

• $7,575

• $8,250

• None of the choices are correct.

b)- Suppose Arlington LLC purchased an automobile for $55,000 on July 5, 2020. What is Taylor's maximum depreciation deduction for 2020 (including bonus depreciation) if its business use percentage is 100 percent?

• $10,100

• $11,000

• $18,100

• $55,000

• None of the choices are correct.

EXHIBIT 10-10 Automobile Depreciation Limits

Recovery Year Year Placed in Service 2020* 2019 2018 2017 1 10,100** 10,100* 10,000* 3,160* 2 16,100 16,100 16,000 5,100 3 9,700 9,700 9,600 3,050 4 and after 5,760 5,760 5,760 1,875

*As of press date, the IRS had not released the 2020 limitations for automobiles, so throughout the chapter we use the same limitations as in 2019 for 2020.

**$8,000 additional depreciation is allowed when bonus depreciation is claimed [§168(k)(2)(F)].

Answer 1

1) a luxury auto maximum depreciation in first year is lesser of 10,000 or its macrs amount of 11,000(55,000*20%)

=10,000*75%=7500(75% used for business purpose)

none of these choices are correct

2) lower of 10,000 or 11,000=10,000+ bonus deprecitaon allowed

=10,000+8000=18,000

none of choices are correct

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