Required information (The following information applies to the questions displayed below.) 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 $179 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.) b. The vehicle cost $80,000, and business use is 100 percent Year 2021 Depreciation deduction 10,200 16,400 2022 s Table 1 MACRS Half-Year Convention 20-Year 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 Year 1 3.750% Year 2 7.219 Year 3 14.81 19.20 17.49 14.40 8.55 6.677 7.41 11.52 12.49 11.52 7.70 Year 4 Year 5 6.177 5.713 11.52 9.22 6.93 8.93 8.92 Year 6 5.76 7.37 6.23 5.285 Year 7 8.93 6.55 5.90 4.888 Year 8 4.46 6.55 5.90 4.522 Year 9 6.56 5.91 4.462 6.55 5.90 4.461 4.462 3.28 5.91 Year 10 Year 11 Year 12 Year 13 5.90 4.461 5.91 4.462 Year 14 5.90 4.461 5.91 4.462 Year 15 Year 16 2.95 4.461 4.462 4.461 Year 17 Year 18 Year 19 Year 20 Year 21 4.462 4.461 2.231 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 Years 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 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 Years 11.30 9.30 Year 6 7.06 8.85 Year 7 8.86 Year 5.53 TABLE 24 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 Years 10.94 10.04 Year 6 958 8.73 Year 7 8.73 Year 8 764 EXHIBIT 10-10 Automobile Depreciation Limits Recovery Year 1 2 3 4 and after 2021 10,100* 16,100 9,700 5,760 Year Placed in Service 2020 2019 10.100** 10,100 16,100 16,100 9,700 9,700 5,760 5,760 2018 10,000+ 16,000 9,600 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 ($168(2)(2)(F)
