Question: Help!! With Tax Problem. Not sure what I am doing wrong. Problem 9-23 (Algorithmic) (LO. 2) On July 1, 2016, Rex purchases a new automobile

Help!! With Tax Problem. Not sure what I am doing wrong.

Help!! With Tax Problem. Not sure what I am doing wrong. Problem9-23 (Algorithmic) (LO. 2) On July 1, 2016, Rex purchases a new

Problem 9-23 (Algorithmic) (LO. 2) On July 1, 2016, Rex purchases a new automobile for $43,000. He uses the car 86% for business and drives the car as follows: 6,000 miles in 2016, 15,000 miles in 2017, 16,800 miles in 2018, and 12,000 miles in 2019. Determine Rex's basis in the business portion of the auto as of January 1, 2020, under the following assumptions: If required, round your computations to the nearest dollar. a. Rex uses the automatic mileage method. Compute his basis adjustments for depreciation for each year. Click here to access the basis adjustment table. 2016: $ 1,238 2017: $ 3,225 2018: $ 3,612 2019: $ 2,683 Rex's adjusted basis in the auto on January 1, 2020, is $ 26,222 . b. Rex uses the actual cost method. [Assume that no 179 expensing is claimed and that 200% declining-balance cost recovery with the half-year convention is used. The recovery limitation for an auto placed in service in 2016 is as follows: $3,160 (first year), $5,100 (second year), $3,050 (third year), and $1,875 (fourth year).] Compute his depreciation deductions for year. Click here to access the depreciation table. 2016: $ 3,160 x 2017: $ 5,100 x 2018: $ 3,050 x 2019: $ 1,875 x Rex's adjusted basis in the auto on January 1, 2020, is $ 23,795 X. Feedback Check My Work The law places special limitations on the cost recovery deduction for passenger automobiles. These statutory dollar limits were imposed passenger automobiles because of the belief that the tax system was being used to underwrite automobiles whose cost and luxury far exceeded what was needed for their business use

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!