b. Tater wants to maximize her 2020 depreciation using bonus depreciation. 2020 Amount Description (1) Original basis of auto (2) Bonus percentage (3) MACRS depreciation (4) Luxury car limitation Depreciation deduction for 2020 0 $ 0 2021 Amount Description (1) 2020 depreciation (2) Adjusted depreciable basis (3) Depreciation rate 2021 calculated depreciation before (4) limitation (5) Depreciation deduction for 2021 % ! Required information [The following information applies to the questions displayed below.] Tater Meer purchased a new car for use in her business during 2020 for $75,000. The auto was the only business asset she purchased during the year, and her business was very profitable. Calculate Tater's maximum depreciation deductions for the automobile in 2020 and 2021 under the following scenarios: (Use MACRS Table 1, Table 2, and Exhibit 10-10.) a. Tater does not want to take $179 expense and she elects out of bonus depreciation. 2020 Amount 2021 Amount Description (1) Original basis of auto (2) MACRS depreciation rate (3) Full MACRS depreciation (4) Maximum auto depreciation Depreciation deduction for year 0 $ 0 $ 0 0 Table 1 MACRS Half-Year Convention Depreciation Rate for Recovery Period 5-Year 7-Year 10-Year 15-Year 3-Year 20-Year Year 1 33.33% 20.00% 14.29% 10.00% 5.00% 3.750% Year 2 44.45 32.00 24.49 18.00 9.50 7.219 Year 3 14.81 19.20 17.49 14.40 8.55 6.677 Year 4 7.41 11.52 12.49 11.52 7.70 6.177 Year 5 11.52 8.93 9.22 6.93 5.713 Year 6 5.76 8.92 7.37 6.23 5.285 6.55 5.90 4.888 Year 7 Year 8 8.93 4.46 6.55 5.90 4.522 Year 9 6.56 5.91 4.462 Year 10 6.55 5.90 4.461 Year 11 3.28 5.91 4.462 Year 12 5.90 4.461 Year 13 5.91 4.462 Year 14 5.90 4.461 Year 15 5.91 4.462 Year 16 2.95 4.461 Year 17 4.462 Year 18 4.461 Year 19 4.462 Year 20 4.461 Year 21 2.231 TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 35.00% 25.00% Year 2 26.00 21.43 Year 3 15.60 15.31 Year 4 11.01 10.93 Year 5 11.01 8.75 Year 6 1.38 8.74 Year 7 8.75 Year 8 1.09 TABLE 26 MACRS Mid-Quarter Convention: For property placed in service during the second quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 25.00% 17.85% Year 2 30.00 23.47 Year 3 18.00 16.76 Year 4 11.37 11.97 Year 5 11.37 8.87 Year 6 4.26 8.87 Year 7 8.87 Year 8 3.34 TABLE 2 MACRS Mid-Quarter Convention: For property placed in service during the third quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 15.00% 10.71% Year 2 34.00 25.51 Year 3 20.40 18.22 Year 4 12.24 13.02 Year 5 11.30 9.30 Year 6 7.06 8.85 Year 7 8.86 Year 8 5.53 TABLE 2d MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 5.00% 3.57% Year 2 38.00 27.55 Year 3 22.80 19.68 Year 4 13.68 14.06 Year 5 10.94 10.04 Year 6 9.58 8.73 Year 7 8.73 Year 8 7.64 EXHIBIT 10-10 Automobile Depreciation Limits Recovery Year 1 2 3 4 and after 2020* 10,100** 16,100 9,700 5,760 Year Placed in Service 2019 2018 10,100* 10,000* 16,100 16,000 9,700 9,600 5,760 5,760 2017 3,160* 5,100 3,050 1,875 *As of press date, the IRS had not released the 2020 limitations for automobiles, so throughout the chapter we use the same limitations as in 2019 for 2020. **$8,000 additional depreciation is allowed when bonus depreciation is claimed ($168(k)(2)(F)]. b. Tater wants to maximize her 2020 depreciation using bonus depreciation. 2020 Amount Description (1) Original basis of auto (2) Bonus percentage (3) MACRS depreciation (4) Luxury car limitation Depreciation deduction for 2020 0 $ 0 2021 Amount Description (1) 2020 depreciation (2) Adjusted depreciable basis (3) Depreciation rate 2021 calculated depreciation before (4) limitation (5) Depreciation deduction for 2021 % ! Required information [The following information applies to the questions displayed below.] Tater Meer purchased a new car for use in her business during 2020 for $75,000. The auto was the only business asset she purchased during the year, and her business was very profitable. Calculate Tater's maximum depreciation deductions for the automobile in 2020 and 2021 under the following scenarios: (Use MACRS Table 1, Table 2, and Exhibit 10-10.) a. Tater does not want to take $179 expense and she elects out of bonus depreciation. 2020 Amount 2021 Amount Description (1) Original basis of auto (2) MACRS depreciation rate (3) Full MACRS depreciation (4) Maximum auto depreciation Depreciation deduction for year 0 $ 0 $ 0 0 Table 1 MACRS Half-Year Convention Depreciation Rate for Recovery Period 5-Year 7-Year 10-Year 15-Year 3-Year 20-Year Year 1 33.33% 20.00% 14.29% 10.00% 5.00% 3.750% Year 2 44.45 32.00 24.49 18.00 9.50 7.219 Year 3 14.81 19.20 17.49 14.40 8.55 6.677 Year 4 7.41 11.52 12.49 11.52 7.70 6.177 Year 5 11.52 8.93 9.22 6.93 5.713 Year 6 5.76 8.92 7.37 6.23 5.285 6.55 5.90 4.888 Year 7 Year 8 8.93 4.46 6.55 5.90 4.522 Year 9 6.56 5.91 4.462 Year 10 6.55 5.90 4.461 Year 11 3.28 5.91 4.462 Year 12 5.90 4.461 Year 13 5.91 4.462 Year 14 5.90 4.461 Year 15 5.91 4.462 Year 16 2.95 4.461 Year 17 4.462 Year 18 4.461 Year 19 4.462 Year 20 4.461 Year 21 2.231 TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 35.00% 25.00% Year 2 26.00 21.43 Year 3 15.60 15.31 Year 4 11.01 10.93 Year 5 11.01 8.75 Year 6 1.38 8.74 Year 7 8.75 Year 8 1.09 TABLE 26 MACRS Mid-Quarter Convention: For property placed in service during the second quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 25.00% 17.85% Year 2 30.00 23.47 Year 3 18.00 16.76 Year 4 11.37 11.97 Year 5 11.37 8.87 Year 6 4.26 8.87 Year 7 8.87 Year 8 3.34 TABLE 2 MACRS Mid-Quarter Convention: For property placed in service during the third quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 15.00% 10.71% Year 2 34.00 25.51 Year 3 20.40 18.22 Year 4 12.24 13.02 Year 5 11.30 9.30 Year 6 7.06 8.85 Year 7 8.86 Year 8 5.53 TABLE 2d MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 5.00% 3.57% Year 2 38.00 27.55 Year 3 22.80 19.68 Year 4 13.68 14.06 Year 5 10.94 10.04 Year 6 9.58 8.73 Year 7 8.73 Year 8 7.64 EXHIBIT 10-10 Automobile Depreciation Limits Recovery Year 1 2 3 4 and after 2020* 10,100** 16,100 9,700 5,760 Year Placed in Service 2019 2018 10,100* 10,000* 16,100 16,000 9,700 9,600 5,760 5,760 2017 3,160* 5,100 3,050 1,875 *As of press date, the IRS had not released the 2020 limitations for automobiles, so throughout the chapter we use the same limitations as in 2019 for 2020. **$8,000 additional depreciation is allowed when bonus depreciation is claimed ($168(k)(2)(F)]