Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In January of the current year, your company purchased a sport utility vehicle (SUV) weighing 6,100 pounds in the amount of $130,000 for business-use only.

In January of the current year, your company purchased a sport utility vehicle (SUV) weighing 6,100 pounds in the amount of $130,000 for business-use only. At December 31st, you (the business owner) provide all the necessary information and documentation to your tax advisor to discuss tax options, more specifically depreciation. Your goal is to minimize the business's tax liability. After preparing financial statements, business income for the year was $85,000. Your accountant presents you with two options for depreciating the vehicle: MACRS (modified accelerated cost recovery system) or Section 179 deduction.

In your original (initial) post, write a letter to the client addressing the following concepts:

  1. Difference between MACRS (modified accelerated cost recovery system) and Section 179 deduction
  2. How might the company's financial goals, future plans, and cash flow situation influence the choice between MACRS and the Section 179 deduction?
  3. Share your insights and perspectives on which strategy you believe would be more suitable for the given scenario and why.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Accounting For Beginners

Authors: Nicholas Apostolides

1st Edition

0815351224, 978-0815351221

More Books

Students also viewed these Accounting questions

Question

Discuss the steps in the development planning process. page 399

Answered: 1 week ago

Question

Identify the cause of a performance problem. page 380

Answered: 1 week ago