Lina purchased a new car for use in her business during 2021. The auto was the only business asset she purchased during the year, and her business was extremely profitable. Calculate her maximum depreciation deductions (Including 5179 expense unless stated otherwise) for the automobile in 2021 and 2022 (Lina doesn't want to take bonus depreciation for 2021 or 2022) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1. Table 2. and Exhibit 10-10.) n. The vehicle cost $31,200, and business use is 100 percent (ignore $179 expense), Year Depreciation deduction 2021 2022 Lina purchased a new car for use in her business during 2021. The auto was the only business asset she purchased during the year, and her business was extremely profitable. Calculate her maximum depreciation deductions (including 5179 expense unless stated otherwise) for the automobile in 2021 and 2022 (Lina doesn't want to take bonus depreciation for 2021 or 2022) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Toble 1. Table 2. and Exhibit 10-10.) b. The vehicle cost $76,000, and business use is 100 percent Year Depreciation deduction 2021 2022 Table 1 MACRS Half-Year Convention 20-Year Year 1 3.750% 7.219 Year 2 Depreciation Rate for Recovery Period 3-Year 5-Year 7-Year 10-Year 15-Year 33.33% 20.00% 14.29% 10.00% 5.00% 44.45 32.00 24.49 18.00 9.50 14.81 19.20 17.49 14.40 8.55 7.41 11.52 12.49 11.52 7.70 11.52 8.93 9.22 6.93 Year 3 6.677 Year 4 6.177 Year 5 5.713 Year 6 5.76 8.92 7.37 6.23 5.285 Year 7 8.93 5.90 4.888 6.55 6.55 4.46 5.90 4.522 Year 8 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 Year 13 5.90 5.91 5.90 Year 14 4.461 4.462 4.461 4.462 4.461 Year 15 5.91 Year 16 2.95 4.462 4.461 Year 17 Year 18 Year 19 Year 20 4.462 4.461 2.231 Year 21 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 Year 8 8.75 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 26 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 20 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 Placed in Service Year 2021 2020 2019 2018 1 10.100** 10.100** 10,100 10.000** 2 16.100 16,100 16,100 16,000 3 9,700 9.700 9.700 9,600 4 and after 5.760 5.760 5,760 5,760 *As of press date, the IRS had not released the 2021 limitations for automobiles, so throughout the chapter we use the same limitations as in 2020 for 2021 **$8,000 additional depreciation is allowed when bonus depreciation is claimed (8168(X2)F)]
