Problem $8-10($Algorithmic$)$

Modified Accelerated Cost Recovery System $($MACRS$),$ Election to Expense, Listed Property, Limitation on Depreciation of Luxury

Automobiles $($LO $8\mathrm{.}2,8\mathrm{.}3,8\mathrm{.}4,8\mathrm{.}5)$

During $2022,$ William purchases the following capital assets for use in his catering business:

Assume that William decides to use the election to expense on the baking equipment $($and has adequate taxable income to cover

the deduction$)$ but not on the automobile, and he also uses the MACRS accelerated method to calculate depreciation but elects out

of bonus depreciation.

Click here to access the depreciation table and click here to access the annual automobile depreciation limitations$.$

Calculate William's maximum depreciation deduction for $2022,$ assuming he uses the automobile $100$ percent in his business.

$$10,000x$

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Under Internal Revenue Code Section $179,$ taxpayers may elect to expense a limited amount of the acquisition cost of certain pr

cost would otherwise have to be deducted over a period of time using the regular cost recovery depreciation rules.

The Section $179$ deduction applies to both new and used property. To qualify for this limited expensing election, the property mu

property placed in service during the year. Section $179$ places three limitations on the expensing election: $(1)$ a maximum on the

amount expensed, $(2)$ a phase$-$out of the annual amount limit$,$ and $(3)$ the taxable income limit$.$

In addition to the limitations on the depreciation of passenger automobiles imposed by the listed property rules, the depreciation

automobiles is subject to an additional limitation$,$ commonly referred to as the luxury automobile limitation$.$