I:10-26 Conversion of Personal Asset to Business Use. Sid purchased an automobile for personal use on January
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I:10-26 Conversion of Personal Asset to Business Use. Sid purchased an automobile for personal use on January 18, 2018 for $20,000. On January 1, 2022, Sid starts a small business and begins to use the automobile exclusively in the business. The automobile’s FMV on this date is $12,000. MACRS depreciation deductions are based on a 5-year recovery period.
a. What is the automobile’s basis for depreciation when converted to business use in 2022?
b. Assuming Sid does not elect Sec. 179 expensing and elects out of bonus depreciation, what is Sid’s depreciation deduction in 2022?
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