Karen is an employee of KF Corporation (a calendar-year taxpayer). In February 2017, KF purchased a new $40,000 car for Karen’s use. During 2017, 2018, and 2019, 60 percent of Karen’s mileage on the car was business related and 40 percent was for her personal driving. Her personal use was properly treated as taxable fringe benefit income.
a. Compute KF Corporation’s depreciation deductions for 2017, 2018, and 2019 if the maximum depreciation was claimed.
b. How would your answers change if Karen had used the car for only 45 percent business use and 55 percent personal use?