Nash Enterprises purchased a delivery truck on January 1, 2020, at a cost of $25,500. The truck has a useful life of 7 years with an estimated salvage value of $6,180. The straight-line method is used for book purposes. For tax purposes, the truck, having an MACRS class life of 7 years, is classified as 5-year property; the optional MACRS tax rate tables are used to compute depreciation. In addition, assume that for 2020 and 2021 the company has revenues of $218,000 and operating expenses (excluding depreciation) of $141,700. MACRS Depreciation Rates by Class of Property | Recovery Year | | 3-year (200% DB) | | 5-year (200% DB) | | 7-year (200% DB) | | 10-year (200% DB) | | 15-year (150% DB) | | 20-year (150% DB) | 1 | | 33.33 | | 20.00 | | 14.29 | | 10.00 | | 5.00 | | 3.750 | 2 | | 44.45 | | 32.00 | | 24.29 | | 18.00 | | 9.50 | | 7.219 | 3 | | 14.81* | | 19.20 | | 17.49 | | 14.40 | | 8.55 | | 6.677 | 4 | | 7.41 | | 11.52* | | 12.49 | | 11.52 | | 7.70 | | 6.177 | 5 | | | | 11.52 | | 8.93* | | 9.22 | | 6.93 | | 5.713 | 6 | | | | 5.76 | | 8.92 | | 7.37 | | 6.23 | | 5.285 | 7 | | | | | | 8.93 | | 6.55* | | 5.90* | | 4.888 | 8 | | | | | | 4.46 | | 6.55 | | 5.90 | | 4.522 | 9 | | | | | | | | 6.56 | | 5.91 | | 4.462* | 10 | | | | | | | | 6.55 | | 5.90 | | 4.461 | 11 | | | | | | | | 3.28 | | 5.91 | | 4.462 | 12 | | | | | | | | | | 5.90 | | 4.461 | 13 | | | | | | | | | | 5.91 | | 4.462 | 14 | | | | | | | | | | 5.90 | | 4.461 | 15 | | | | | | | | | | 5.91 | | 4.462 | 16 | | | | | | | | | | 2.95 | | 4.461 | 17 | | | | | | | | | | | | 4.462 | 18 | | | | | | | | | | | | 4.461 | 19 | | | | | | | | | | | | 4.462 | 20 | | | | | | | | | | | | 4.461 | 21 | | | | | | | | | | | | 2.231 | | | | *Switchover to straight-line depreciation. | | | | |