Modified Accelerated Cost Recovery System (MACRS), Listed Property, Limitation on Depreciation of Luxury Automobiles (LO 8.2, 8.4, 8.5)

On September 14, 2018, Jay purchased a passenger automobile that is used 75 percent in his accounting business. The automobile has a basis for depreciation purposes of $43,000, and Jay uses the accelerated method under MACRS. Jay does not elect to expense under section 179.

 Calculate Jay's depreciation deduction for 2018 assuming bonus depreciation.

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TABLE 8.2 Recovery Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Accelerated Depreciation for Personal Property Assuming Half-Year Convention (For Property Placed in Service after December 31, 1986) 3-Year (200% DB) 33.33 44.45 14.81* 7.41 *Switch to straight-line depreciation. 5-Year (200% DB) 20.00 32.00 19.20 11.52. 11.52 5.76 7-Year (200% DB) 14.29 24.49 17.49 12.49 8.93 * 8.92 8.93 4.46 10-Year (200% DB) 10.00 18.00 14.40 11.52 9.22 7.37 6.55* 6.55 6.56 6.55 3.28 15-Year (150% DB) 5.00 9.50 8.55 7.70 6.93 6.23 5.90* 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95 20-Year (150% DB) 3.750 7,219 6.677 6.177 5.713 5.285 4.888 4.522 SEN 4.462. 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 ANNUAL AUTOMOBILE DEPRECIATION LIMITATIONS AUTOMOBILES ACQUIRED IN 2018. 2018 Year 1 Year 2 Year 3 Year 4 (and subsequent years until fully depreciated) Auto Depreciation $18,000* 16,000 9,600 5,760 *Additional bonus depreciation of $8,000 is included in this amount. TABLE 8.2 Recovery Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Accelerated Depreciation for Personal Property Assuming Half-Year Convention (For Property Placed in Service after December 31, 1986) 3-Year (200% DB) 33.33 44.45 14.81* 7.41 *Switch to straight-line depreciation. 5-Year (200% DB) 20.00 32.00 19.20 11.52. 11.52 5.76 7-Year (200% DB) 14.29 24.49 17.49 12.49 8.93 * 8.92 8.93 4.46 10-Year (200% DB) 10.00 18.00 14.40 11.52 9.22 7.37 6.55* 6.55 6.56 6.55 3.28 15-Year (150% DB) 5.00 9.50 8.55 7.70 6.93 6.23 5.90* 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95 20-Year (150% DB) 3.750 7,219 6.677 6.177 5.713 5.285 4.888 4.522 SEN 4.462. 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 ANNUAL AUTOMOBILE DEPRECIATION LIMITATIONS AUTOMOBILES ACQUIRED IN 2018. 2018 Year 1 Year 2 Year 3 Year 4 (and subsequent years until fully depreciated) Auto Depreciation $18,000* 16,000 9,600 5,760 *Additional bonus depreciation of $8,000 is included in this amount.

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