On April 5, 2019, Kinsey places in service a new automobile that cost $42,500. He does not elect 179 expensing, and he elects not to take any available additional first-year depreciation. The car is used 80% for business and 20% for personal use in each tax year. Kinsey chooses the MACRS 200% declining-balance method of cost recovery (the auto is a 5-year asset).
Click here to access the depreciation table to use for this problem.
Assume the following luxury automobile limitations: year 1: $10,000; year 2: $16,000. If required, round your final answers to the nearest dollar.
Compute the total depreciation allowed for:
5.44 PART 2 Structure of the Federal Income Tax EXHIBIT 5.5 MACRS Accelerated Depreciation for Personal Property Assuining Mid Quarter Convention (Percentage Rates) Third Quarter 38.89 For Property Placed in Service after December 31, 1986 (Partial Table') Recovery Year First Quarter 3-Year Second Quarter 58.33 Fourth Quarter 41.67 27.78 25.00 8.33 50.00 61.11 Recovery Year 5-Year First Quarter Second Quarter 35.00 Fourth Quarter 25.00 26.00 15.00 30.00 5.00 34.00 38.00 Recovery Year 7-Year First Quarter Second Quarter Third Quarter Fourth Quarter 25.00 17.85 10.71 21.43 23.47 25.51 *The figures in this table are taken from the official tables that appear in Rev.Proc, 87-57, 1987-2 C.B. 697. Because of their length, the complete tables are not 27.55 presented Third Quarter 357 EXHIBIT 5.6 MACRS Straight-Line Depreciation for Real Property Assuming Mid-Month Convention For Property Placed in Service after December 31, 1986: 27.5-Year Residential Real Property Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property is placed in Service): Year(s) 1 2 3 4 5 6 7 8 9 10 11 12 3.485 3.182 2.879 2.576 2.273 1.970 1.667 1.364 1.061 0.758 0.455 0.152 2-18 3.636 3.636 3.636 3.636 3.636 3.636- 3.636 3.636 3.636 3.636 3.636 3.636 19-27 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3637 3.637 28 1.970 2.273 2.576 2.879 3.182 3.485 3.636 3.636 3.636 3.636 3.636 3,636 0.000 0.000 0.000 0.000 0.000 0.000 0.152 0.455 0.758 1.061 1.364 1667 29 For Property Placed in Service after December 31, 1986, and before May 13, 1993: 31.5-Year Nonresidential Real Property Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property is placed in Service: Year(s) 1 2 3 4 5 6 7 8 9 10 11 12 3.042 2.778 2.513 2.249 1.984 1.720 1.455 1.190 0.926 0.661 0.397 0.132 2-19 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 20-30 3.174 3.174 3 .174 3.174 3.174 3.174 3.174 3.174 3.174 3.174 3.174 3.174 32 1.720 1.984 2.249 2.513 2.778 3.042 3.175 3.175 3.175 3.175 3.175 3.175 33 0.000 0.000 0.000 0.000 0.000 0.000 0.132 0.397 0.661 0.926 1.190 1455 For Property Placed in Service after May 12, 1993: 39-Year Nonresidential Real Property Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property is placed in Service): Year(s) 1 2 3 4 5 6 7 8 9 10 11 12 2.461 2.247 2.033 1.819 1.605 1.391 1.177 0.963 0.749 0.535 0.321 0.107 2-39 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 40 0.107 0.321 0.535 0.7490.963 1.177 1.391 1.605 1.819 2.033 2.247 2.461 The official tables contain a separate row for each year. For ease of presentation, certain years are grouped in these tables. In some instances, this will produce a difference of 0.001 for the last digit when compared with the official tables. EXHIBIT 5.7 CHAPTER 5 Business Deductions SES MACRS Straight-Line Depreciation for Personal Property and Qualified Improvement Property Assuming Half Year Convention Year For Property Placed in Service after December 31, 1986 MACRS Other Recovery Years % First Last Recovery Year Class Recovery Year Years % 3-year 16,67 2-3 33.33 5-year 10.00 16.67 2-5 7-year 20.00 7.14 10.00 2-7 14.29 10-year 5.00 7.14 2-10 10.00 11 15-year 5.00 3.33 2-15 6.67 20-year 3.33 2.50 2-20 5.00 2.50 The official table contains a separate row for each year. For ease of presentation, certain years are grouped in this table In some instances, this will produce a difference of 0.01 for the last digit when compared with the official table. Note: The last two rows are used for qualified improvement property : 15-year normal MACRS:20-year ADS. EXHIBIT 5.4 NEW MACRS Accelerated Depreciation for Personal Property Assuming Hall Year Convenian (Percentage Rates) 20-Year (150% DB) For Property Placed in Service after December 31, 1986 Recovery 3-Year 5-Year 7-Year 10-Year Year (200% DB) (200% DB) (200% DB) (200% DB) 33.33 20.00 14.29 10.00 44.45 32.00 24.49 18.00 14.81* 19.20 17.49 14.40 7.41 11.52* 12.49 11.52 11.52 8.93+ 9.22 5.76 8.92 7.37 8.93 6.55* 4.46 6.55 15-Year (150% DB) 5.00 9.50 8.55 7.70 6.93 6.23 5.90* 5.90 656 591 5.90 6.55 3.28 5.91 3.750 7.219 6.677 6.177 5.713 5.285 4.888 4.522 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 5.90 5.91 5.90 2.95 *Switchover to straight-line depreciation. 5.44 PART 2 Structure of the Federal Income Tax EXHIBIT 5.5 MACRS Accelerated Depreciation for Personal Property Assuining Mid Quarter Convention (Percentage Rates) Third Quarter 38.89 For Property Placed in Service after December 31, 1986 (Partial Table') Recovery Year First Quarter 3-Year Second Quarter 58.33 Fourth Quarter 41.67 27.78 25.00 8.33 50.00 61.11 Recovery Year 5-Year First Quarter Second Quarter 35.00 Fourth Quarter 25.00 26.00 15.00 30.00 5.00 34.00 38.00 Recovery Year 7-Year First Quarter Second Quarter Third Quarter Fourth Quarter 25.00 17.85 10.71 21.43 23.47 25.51 *The figures in this table are taken from the official tables that appear in Rev.Proc, 87-57, 1987-2 C.B. 697. Because of their length, the complete tables are not 27.55 presented Third Quarter 357 EXHIBIT 5.6 MACRS Straight-Line Depreciation for Real Property Assuming Mid-Month Convention For Property Placed in Service after December 31, 1986: 27.5-Year Residential Real Property Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property is placed in Service): Year(s) 1 2 3 4 5 6 7 8 9 10 11 12 3.485 3.182 2.879 2.576 2.273 1.970 1.667 1.364 1.061 0.758 0.455 0.152 2-18 3.636 3.636 3.636 3.636 3.636 3.636- 3.636 3.636 3.636 3.636 3.636 3.636 19-27 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3637 3.637 28 1.970 2.273 2.576 2.879 3.182 3.485 3.636 3.636 3.636 3.636 3.636 3,636 0.000 0.000 0.000 0.000 0.000 0.000 0.152 0.455 0.758 1.061 1.364 1667 29 For Property Placed in Service after December 31, 1986, and before May 13, 1993: 31.5-Year Nonresidential Real Property Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property is placed in Service: Year(s) 1 2 3 4 5 6 7 8 9 10 11 12 3.042 2.778 2.513 2.249 1.984 1.720 1.455 1.190 0.926 0.661 0.397 0.132 2-19 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 20-30 3.174 3.174 3 .174 3.174 3.174 3.174 3.174 3.174 3.174 3.174 3.174 3.174 32 1.720 1.984 2.249 2.513 2.778 3.042 3.175 3.175 3.175 3.175 3.175 3.175 33 0.000 0.000 0.000 0.000 0.000 0.000 0.132 0.397 0.661 0.926 1.190 1455 For Property Placed in Service after May 12, 1993: 39-Year Nonresidential Real Property Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property is placed in Service): Year(s) 1 2 3 4 5 6 7 8 9 10 11 12 2.461 2.247 2.033 1.819 1.605 1.391 1.177 0.963 0.749 0.535 0.321 0.107 2-39 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 40 0.107 0.321 0.535 0.7490.963 1.177 1.391 1.605 1.819 2.033 2.247 2.461 The official tables contain a separate row for each year. For ease of presentation, certain years are grouped in these tables. In some instances, this will produce a difference of 0.001 for the last digit when compared with the official tables. EXHIBIT 5.7 CHAPTER 5 Business Deductions SES MACRS Straight-Line Depreciation for Personal Property and Qualified Improvement Property Assuming Half Year Convention Year For Property Placed in Service after December 31, 1986 MACRS Other Recovery Years % First Last Recovery Year Class Recovery Year Years % 3-year 16,67 2-3 33.33 5-year 10.00 16.67 2-5 7-year 20.00 7.14 10.00 2-7 14.29 10-year 5.00 7.14 2-10 10.00 11 15-year 5.00 3.33 2-15 6.67 20-year 3.33 2.50 2-20 5.00 2.50 The official table contains a separate row for each year. For ease of presentation, certain years are grouped in this table In some instances, this will produce a difference of 0.01 for the last digit when compared with the official table. Note: The last two rows are used for qualified improvement property : 15-year normal MACRS:20-year ADS. EXHIBIT 5.4 NEW MACRS Accelerated Depreciation for Personal Property Assuming Hall Year Convenian (Percentage Rates) 20-Year (150% DB) For Property Placed in Service after December 31, 1986 Recovery 3-Year 5-Year 7-Year 10-Year Year (200% DB) (200% DB) (200% DB) (200% DB) 33.33 20.00 14.29 10.00 44.45 32.00 24.49 18.00 14.81* 19.20 17.49 14.40 7.41 11.52* 12.49 11.52 11.52 8.93+ 9.22 5.76 8.92 7.37 8.93 6.55* 4.46 6.55 15-Year (150% DB) 5.00 9.50 8.55 7.70 6.93 6.23 5.90* 5.90 656 591 5.90 6.55 3.28 5.91 3.750 7.219 6.677 6.177 5.713 5.285 4.888 4.522 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 5.90 5.91 5.90 2.95 *Switchover to straight-line depreciation
